by Mark Bradford
CFO
Kyocera Group UK
This year continues to be dominated by strong headwinds caused by financial and workforce challenges, yet we must remain determined to pursue growth. Price Inflation persists, high interest rates remain and foreign currency is volatile, all these factors impact strategies for 2023 into 2024.
My team has a tough balancing act: to execute on a plan that prioritises growth and also ensures cash flows. Key decisions include where to allocate resources and capital and where to invest in to secure and retain the best talent.
The rules of engagement are changing faster than ever, navigating the challenges above relies on a combination of the insights gleaned from previous periods of economic turbulence and my teams’ experience, gone are the days of a simple financial playbook.
Some reflections on experiences through 2023 into 2024 are as follows:
Despite the aggressive interest rates, we have seen persistent high inflation, albeit at slightly slower rates in recent months. As a result, many expect that higher interest rates will be with us for some time yet in an ongoing effort to combat inflation. In addition, continued geopolitical tensions in other parts of the world means increased volatility in exchange rates.
Closing 2023 and planning for 2024 is more difficult than ever, these challenging economic conditions will likely persist. Focusing on cash flow while driving business growth is a delicate balance that demands more accurate forecasting models, as well as more realistic growth targets to keep the business headed in the right direction. We have had to create a more flexible forecasting model as these market conditions evolve and ensure our cost base is aligned to realistic revenue projections.
Inflation, interest rates and foreign currency will all significantly impact revenue and expenses, and my team are spending more time searching for ways to offset these issues. One approach which may be useful is to conduct a thorough vendor spend analysis to help determine what is critical, and what is not, for the year ahead.
I am 100% aligned with the Board that digitalisation is a high investment priority. We recognise the need to invest in digital technologies as a top priority, with the continued automation of finance processes a key aspect of this. Kyocera has already implemented a number of automated accounts payable functions with more on the way.
Leveraging digital technologies, such as automation, to modernise financial reporting processes improves efficiency and accuracy, freeing up time for finance teams to focus on more strategic, value-additive work. This digital automation also boosts employee engagement, further driving any growth initiatives. Optimising operational processes with digital tools is critical for business success during these periods of volatility.
In most organisations today wage growth trails inflation rates, despite the increase in competition for finance talent. We need to think strategically about where to allocate resources and investments to protect and strengthen the talent pool.
Increasingly providing career development and clearly defined growth opportunities is the most effective way of retaining talent on the team. The trick is to establish a strong link with your HR team to implement repeatable talent planning strategies that are aligned with business objectives. To that end we conduct half yearly assessments of our team and compare that work to ensure we have the talent and skills needed to execute the business strategy.
The focus is to identify skills, gaps, and any potential upskilling opportunities. This helps identify development and investment priorities that can strengthen the business, as well as continue to engage, grow, and retain the finance team.
Environmental, social and governance (ESG) considerations are integral to our corporate strategy. Embedding these sustainability metrics into our financial reporting ensures we are following transparent and sustainable business practices. ESG and CSR have increasingly become factors in winning new business as organisations realise that price is not the only factor in play.
Embracing CSR increases customer retention and loyalty, increases employee engagement, improves brand imaging, attracts investment opportunities and top talent, and makes a difference in bottom-line financials.
Investments in digital transformation and talent retention are top priorities in the period ahead, with the anticipated continuation of workforce challenges and higher demand for business-critical insights from finance teams. A focus on these key areas gives our team a strong and secure plan, despite the challenging economic conditions.
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