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Urgent Call to Action: CFOs Tackle Financial Modernization

In an ever-changing economic landscape, the role of Chief Financial Officers (CFOs) in the middle market is undergoing a profound transformation. Cherry Bekaert, a prominent advisory firm, has unveiled significant insights from its inaugural survey of U.S. middle market CFOs, highlighting the urgent need for financial modernization. With 99% of CFOs indicating plans to revamp their financial operations within the next year, it’s clear that adapting to contemporary challenges is now a top priority.

A Critical Shift

The survey, titled "Modernization in Motion Insights from Middle Market CFOs," engaged senior finance executives from companies valued at $5 million to $250 million across various sectors. The findings are illuminating, underscoring a strategic imperative: the need for swift and informed decision-making in the realm of finance. As economic uncertainty, technological disruptions, and talent shortages loom, finance leaders are re-evaluating their operational strategies.

Fragmented Systems and Data Hurdles

One of the major takeaways from the survey is the challenge posed by fragmented systems. A staggering 58% of CFOs reported that system disintegration hampers their ability to forecast accurately and efficiently. Additionally, 55% indicated that accuracy and consistency in data remain significant challenges. Without a unified system, the agility required for rapid decision-making is severely compromised.

Talent Gaps are a Barrier

The survey also revealed that talent shortages are a pressing concern. A notable 42% of CFOs believe skill gaps impede the adoption of automation technologies, while 44% claim that their technology experts lack essential knowledge of finance. This disconnect is alarming, as it highlights the importance of investing in upskilling existing finance teams. In response, 71% of respondents intend to bolster the expertise of their current staff, and 61% plan to recruit new talent within the next year.

Manual Processes Still Prevalent

While innovation is vital, many CFOs still rely on cumbersome manual processes. The survey revealed that 26% continue to depend on time-consuming manual methods for fundamental activities such as month-end closes (29%), audit preparation (34%), and budgeting (23%). Such practices not only slow down operations but also increase the likelihood of errors, further complicating decision-making.

Accelerating AI Adoption

Interestingly, the embrace of artificial intelligence (AI) is gaining momentum among CFOs. Almost half (47%) of survey participants are leveraging AI or machine learning-based financial tools. However, the transition from adoption to tangible gains remains a challenge, with many CFOs reporting difficulties in measuring the impact of their AI initiatives. Nevertheless, 69% are committed to exploring new, efficient operational methodologies over the upcoming year, driven by the promise of AI and automation technology.

Modernization: An Urgent Mandate

The research indicates an urgent need for enterprise-wide modernization efforts. A striking 59% of CFOs are actively facilitating company expansion, while 52% are engaged in digital transformation projects. The results demonstrate that the ability to make rapid, data-driven decisions is critical for middle market organizations aiming to navigate disruption and enhance enterprise value.

Roy Nicholson, the Business Optimization Leader at Cherry Bekaert, emphasized the shift in responsibilities for CFOs: "CFOs are being asked to deliver faster, smarter decisions with lean teams and tight budgets. Our survey illustrates that inaction is becoming increasingly costly, and the path to swift response lies in integrated data and scenario-ready planning."

Evolving Beyond Traditional Roles

The findings also reveal a significant change in the perception of the CFO role. Nearly two-thirds of CFOs now see themselves as strategic architects of growth, spearheading modernization initiatives that are no longer optional but essential for the survival of their organizations. Jenni Huotari, Leader of Outsourced Accounting Services at Cherry Bekaert, remarked, "Success in finance modernization is not solely reliant on technology — it hinges on talent. CFOs need to ensure their teams are equipped with the necessary skills and knowledge to thrive in this new environment."

Strategic Roadmap for Transformation

The full report outlines five critical imperatives for finance transformation: foundational improvements, strategic talent development, intelligent AI utilization, scenario-based planning, and leadership evolution. As CFOs increasingly expand their roles in strategic operational domains, the pressure to modernize intensifies. Without targeted solutions aimed at enhancing efficiency and scalability, finance leaders risk falling behind, ultimately failing to create value for their organizations.

To conclude, Cherry Bekaert’s survey not only identifies the current priorities of middle market CFOs but also serves as a clarion call for immediate action towards financial modernization. The road ahead is challenging, but with commitment and strategic initiatives, middle market organizations can adapt, thrive, and build a robust foundation for future growth.

For a deeper dive into the survey findings, view the full report to explore the intricacies of CFOs' modernization journeys.