The CFO'S Perspective

Without products to sell a manufacturer cannot exist. But without products that sell profitably, it will not stay in business. This is where product development and finance intersect.

Strong financial leadership will ensure that the products being developed are right for the market, priced correctly, and attracting key customers. In an ideal scenario, it looks something like this:

1. Finance will provide the data required to make product decisions
2. Product development will use that information to shape product features and functionality
3. Finance will close the loop by analyzing company performance across the current product mix

This process should be cyclical, with a steady flow of communication between both groups to ensure that the company is constantly evaluating profitability to make strategic revenue decisions. As the head of finance, the CFO should spearhead these efforts.

According to CFO Dive, next year US employers are planning the highest pay raises in 15 years. Overwhelmingly, the executives surveyed cited a tight labor market as their main driver, with 73% indicating that they would be increasing wages to attract and retain their labor force. However, with national wages expected to rise by an average of 4.1%, these pay raises still would not offset the recent drop in real earnings due to rising inflation.

While the national average for wage increases is expected to be around 4% next year, manufacturing is one vertical where pay increases have historically lagged behind the rest of the market’s growth due to stringent control over wages by management and pushback against rising wage trends. So, how much will manufacturers increase wages next year?

Manufacturing CFOs are a unique breed. These financial leaders must not only encompass the typical traits of highly successful CFOs but also thrive in a quickly changing environment. The fast-paced, innovation-centric nature of manufacturing requires a distinct skillset from its leadership. As a result, even CFOs that thrive in other industries can find the role at a manufacturer more challenging because manufacturing has its own financial nuances and requires a commitment to continuous learning.

So, how do you find a CFO that will succeed in the role? Look for the following characteristics:

With US inflation rates rising rapidly small and large manufacturers alike are being affected by inflationary pressures in much the same way, although small manufacturers will undoubtedly feel the sting of rising inflation more deeply than their larger counterparts. These pressures are being further exacerbated by:

• The speculation around a possible recession hitting between now and Q4 of 2023
• All-time record low small business expectations being reported
• The lowest consumer economic expectations being reported since 1980

Knowing that a recession may be coming does not tell us when, why, or how it may occur. However, paired with dropping small business and consumer confidence, a looming recession is only going to worsen the effects of rising inflation rates on US manufacturers.

When talking with colleagues these days it is common to hear people discussing the effectiveness of remote work, especially regarding consulting work. We hear partners and clients saying things like, “I just don’t think we can replicate the kind of interpersonal relationships we used to have virtually.” Yet, at the same time, we hear their employees expressing little desire ever to return to the office full-time, opting instead for fully remote or hybrid work arrangements. This dichotomy begs the question, “Which is better, in-person or remote?”

The last decade has seen an unparalleled push for greater efficiency. Increased automation across all business sectors has ushered in a focus on “faster” and “cheaper.” And while these are certainly important pursuits amidst rising labor and materials costs, they certainly should not be a company’s only focus. Chasing faster and cheaper almost always comes at the expense of “better,” which is a shame because “better” can actually go a long way in achieving both.

Obviously, you cannot simply make business debt disappear. (Wouldn’t that be nice?!) But what you can do is make it more manageable, so it is easier to pay off.

Debt restructuring and debt consolidation are two debt management strategies that companies can use when they need help getting out from under their debt. There is a lot of confusion around these two financial debt management tools, which is why we have decided to put together a quick resource to help business owners and CEOs understand their options.

It is being mentioned on the news, among coworkers in team chats, and over dinner with family day after day. It is keeping Americans (especially business leaders) up at night. In fact, every client meeting we have these days has some discussion around it. What is it? Uncertainty.

Today’s culture is wrought with uncertainty that is absolutely sweeping through every industry. Rising inflation, COVID surges, interest rate hikes, a dramatic increase in the cost of living, the war in Ukraine, and a potential recession all have business leadership mired in a constant state of uncertainty. From professional services and hospitality to tech and manufacturing, uncertainty is taking a toll. And unfortunately, it does not show any signs of dissipating any time soon.

In response, many organizations have begun leaning even more heavily on their CEOs and CFOs to guide them through these tumultuous waters. Consumption patterns have changed, new buying trends have emerged, and supply chains have become murky, reducing confidence levels in business forecasts. And amid it all, CFOs are being asked to manage cash flow, oversee new business priorities, and aid in constantly shifting strategic planning initiatives.