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10th July 2024
CFOs reach highest level of optimism in nearly three years
A new survey from Grant Thornton of more than 225 senior financial leaders has revealed that chief financial officers are optimistic about the U.S. economy, and that at 58%, the level of optimism is at its highest since the third quarter of 2021. Grant Thornton’s Q2 2024 CFO survey found that 63% of respondents are confident in their organization’s ability to meet increased demand — a record high in the history of the CFO survey. Respondents are also feeling confident about meeting supply chain needs (62%), growth projections (56%), cost control goals (55%) and labor needs (55%). Additionally, 75% of CFOs expect their net profit to grow over the next 12 months. Fifty-seven percent of respondents said cost optimization remains their top area of focus this quarter. “Although most finance leaders are confident in their ability to control costs, it’s going to require significant focus,” said Paul Melville, national managing principal of CFO Advisory for Grant Thornton Advisors LLC. “The business environment is ripe for growth, but CFOs must manage costs to capitalize on it.”
CFOs face labor shortages and hybrid work challenges
Steve Gallucci, Deloitte's U.S. National Managing Partner for the CFO Program, highlights the immediate concerns of chief financial officers regarding ongoing labor shortages, especially in artificial intelligence skills, and adapting workplace cultures to new work preferences. Deloitte’s 4Q 2023 CFO Signals survey reveals a significant shift towards hybrid work models, with 65% of CFOs planning to offer such options. The survey underscores the necessity for CFOs to adapt management styles to monitor productivity remotely and the importance of continual learning and flexibility within the finance function to stay resilient amidst rapid technological changes. Gallucci emphasizes that flexibility in work arrangements and upskilling employees are critical in retaining talent and ensuring organizational adaptability in an evolving corporate landscape.
CFOs: The unsung heroes of corporate strategy and growth
A global survey by EgonZehnder of nearly 600 finance chiefs reveals a significant expansion of their roles beyond traditional finance duties, embracing responsibilities in environmental, social, and governance issues, mergers and acquisitions, and corporate strategy. Despite their expanded role, 82% of CFOs report that their work-life balance remains positive and they are energized by their evolving responsibilities. However, despite their crucial role in shaping business futures, CFOs face challenges in transitioning to CEO roles, with 60% aspiring to this position but hindered by limited networking and visibility. The survey underscores the importance of CFOs as strategic partners in revenue generation and critical decision-making within organizations. As they navigate their expanded roles and career aspirations, CFOs continue to focus on core responsibilities like fiduciary duties and fraud prevention, ensuring they safeguard their organizations' futures while managing an increasing workload.
Navigating economic uncertainty: Innovative working capital solutions gain traction
In an evolving economic landscape, businesses are turning to innovative working capital solutions to navigate fluctuations and maintain stability. These solutions, such as virtual and commercial cards, supply chain finance, and invoice finance, provide quicker access to funds, improved cash flow management, and the ability to invest in growth opportunities. Top performers are transforming their cash-conversion culture and implementing digital-analytics solutions to control what's controllable. Chavi Jafa, head of commercial and money movement solutions at Visa, highlights the need for working capital for short-term operational stability and long-term investments in technology. The 2023-2024 Middle Market Growth Corporates Working Capital Index reveals that firms using working capital strategically and tactically outperform those that do not. Businesses recognize the strategic benefits of working capital, with 92% of CFOs surveyed planning to access external working capital in the next 12 months. Working capital solutions, such as loans and virtual cards, are projected to triple in usage. Efficient working capital management also improves buyer-supplier relationships and reduces delays. However, awareness of alternative solutions, like virtual cards, remains a hurdle. Industry stakeholders must educate businesses about the diverse array of working capital solutions available. European regulators are considering reporting requirements for nonbank financial institutions to address the lack of transparency in the shadow banking sector. Nonbank financial institutions accounted for nearly half of the world's financial assets in 2022. Private credit lenders are becoming an alternative source of financing, providing $333bn in loans in 2022.
GOP approves 2024 platform, outlining Trump's second-term agenda
The Republican National Committee's platform committee has approved a 2024 platform that outlines the priorities for Donald Trump's potential second term. The platform, which Mr. Trump played a significant role in writing and editing, addresses issues such as the border, and domestic energy production. In terms of tax, the platform includes principles for individual tax cuts, and getting rid of taxes on gratuities. It also sets out plans for sweeping levies, including 60% tariffs on imports from China and 10% duties on those from the rest of the world. “Republicans will support baseline Tariffs on Foreign-made goods, pass the Trump Reciprocal Trade Act, and respond to unfair Trading practices,” the full platform says. “As Tariffs on Foreign Producers go up, Taxes on American Workers, Families, and Businesses can come down.” Meanwhile, the Urban-Brookings Tax Policy Center says that if the expiring provisions of the 2016 Tax Cuts and Jobs Act are extended, households making at least $450,000 would see their after-tax income increase by 3.2%. Middle-income households earning between roughly $65,000 and $116,000, on the other hand, would receive a tax cut of about $1,000, or 1.3% of their income.
Taxing livestock to offset carbon emissions: A viable solution
Columnist Andrew Leahey, a tax and technology attorney, principal at Hunter Creek Consulting, suggests that taxing carbon emissions from livestock could be an effective way to counteract greenhouse gas emissions from agriculture. With 87.2m cattle in the U.S. contributing to 10% of the nation's agricultural emissions, a livestock tax could drive environmental benefits and promote sustainable practices. Denmark has already implemented a carbon dioxide tax on livestock, providing grants for carbon capture and reforestation. The U.S. should consider adopting a similar approach, incorporating the cost of methane emissions as well. This could be done through a per-head tax or by offsetting existing agricultural subsidies. While such a tax may raise the price of meat and dairy, it could be more politically viable by providing subsidies to farmers and credits to consumers. This approach would help achieve environmental goals while maintaining economic stability. 
Alphabet appoints new finance chief
Alphabet has announced that Anat Ashkenazi will be taking over as the new CFO, replacing Ruth Porat. Ashkenazi, who has been serving as the finance chief at Eli Lilly since 2021, joins Alphabet as the company focuses on investing in artificial intelligence and cutting costs in other areas. The move is aimed at strengthening resources for Alphabet's investment push. "We are excited to welcome Anat to the team," said a spokesperson for Alphabet. "Her experience and expertise in finance will be invaluable as we continue to grow and innovate."
OpenAI appoints Sarah Friar as CFO
OpenAI has appointed Sarah Friar as its new finance chief. Friar, who previously worked at Nextdoor and Square, will lead the ChatGPT makers finances during a period of rapid growth and increasing scrutiny of the artificial intelligence industry. She is OpenAI's first CFO since Brad Lightcap left the role in 2022. Friar served as the CEO of Nextdoor for over five years before stepping down this year. Prior to that, she was the CFO of Square and had also worked at Goldman Sachs and McKinsey.
EY's plan to increase starting salaries by 10% 'falls short for accountants'
EY's plan to increase starting salaries by 10% for accountants is not enough to compete in the current marketplace, according to Jack Castonguay, an assistant professor of accounting at Hofstra University and vice president of content development at KnowFully Learning Group. Accounting and auditing firms need to do more to attract students to the profession. This includes raising salaries above other business fields, committing to work-life balance, and providing funding for students pursuing CPA licensure. While it's a positive step that firms like EY, KPMG, and PwC are boosting salaries, it's concerning that it took so long for them to take action. Other industries have already raised starting salaries to attract talent. Accounting salaries have been negative in real terms over the past decade, while other fields have seen raises beyond inflation. Accounting firms must compensate for the added education, work hours, and skills they demand from new hires. It remains to be seen if these salary increases are a one-time adjustment or a sustained commitment to improving the profession's attractiveness. EY's announcement does not specify how much of the $1bn will be distributed or if future hires can expect similar increases. The impact of these increases may not be seen for several years, as students have already chosen their majors. Pay increases must be higher and longer lasting to address the pipeline challenges and talent crunch in the accounting profession.
Former NRA finance czar banned from managing nonprofits in NY
The former finance czar of the National Rifle Association (NRA), Wilson "Woody" Phillips, has been banned for a decade from managing money for any nonprofit company in New York. This comes after a jury found him liable in a scheme to have the NRA bankroll the extravagant lifestyle of the organization's longtime chief executive, Wayne LaPierre. Phillips agreed to the ban in May and is still responsible for $2m in damages to the NRA. The settlement means that Phillips won't have to participate in the second phase of the trial in New York Attorney General Letitia James' civil lawsuit against the NRA and former top executives. The trial has shed light on the leadership, culture, and finances of the influential lobbying group. 
Leadership in crisis: How to navigate VUCAP times
Phil Portman, a serial entrepreneur and CEO of SMS marketing tool Textdrip, emphasizes the importance of crisis leadership in navigating VUCAP (Volatility, Uncertainty, Complexity, Ambiguity, Pandemic) times. Crisis leadership involves adapting to unexpected events and protecting stakeholder trust and organizational stability. Key qualities of crisis leaders include decisiveness, empathy, transparency, and adaptability. Technology plays a pivotal role in crisis management, with tools like automated communication platforms, chatbots, virtual collaboration platforms, video conferencing solutions, and project management software enhancing communication, customer support, and productivity. Implementing crisis management practices such as resource allocation, dedicated crisis management teams, risk assessment, and effective communication channels can build resilience in organizations. By harnessing technological innovation and leveraging automated communication tools, businesses can withstand, adapt, and recover from crises.
U.S. consumer borrowing picked up in May
Total consumer credit rose $11.3bn in May, up from a $6.5bn gain in the prior month, the Federal Reserve reported Monday, well ahead of the $8bn gain expected by economists polled by the Wall Street Journal. Revolving credit, which includes credit cards, advanced $7bn, while non-revolving credit, such as loans for vehicle purchases and school tuition, increased $4.3bn. The Fed's report showed that borrowing rates on credit cards that charge interest rose to 22.76% in May, just shy of a record in data back to 1994. A 60-month loan from a commercial bank for a new vehicle purchase stood at 8.2%

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