2025 is looking bright
Overall, Levine’s insights provide an intriguing peek into what the future might hold for finance teams. It’s clear that the path towards 2025 will involve increased efficiency, strategic consolidation, and leveraging AI and technology to streamline operations. As finance professionals, it’s essential to stay updated and adapt quickly to these changes to drive business success. So, let’s embrace the challenges and keep moving towards a brighter future.
Now is the time for business optimization
Heading into 2024, business optimization was the trending phrase for finance teams. More comprehensive than simply managing cash flow, CFOs were expecting a year dedicated to strategic deployment of cost-effective measures, risk mitigation, and contingency planning aimed at enhancing efficiency and increasing profitability. Certainly, parts of the business optimization trend were realized this past year but, according to Levine, many organizations got by with tactical cash flow measures, like canceling renewals, renegotiating payables, etc., and have yet to really look inward at the processes and systems that can be streamlined and optimized to the best advantage. Going into 2025, this should change.
“I do think a lot of the low-hanging fruit has probably been realized,” noted Levine. “I would say that we’re getting near the end of what’s been a spending malaise. A lot has to do with interest rates, but I do think we’re now truly entering the optimization phase where CFOs are going to need to be in lockstep with their leadership to really dig in, draw insights, and make the right decisions for their business.”
Mergers and acquisitions: The rise of bolt-on acquisitions
This time last year, forecasters were debating whether M&A activity would increase through 2024 as companies gained more access to cash reserves, or if higher interest rates would trigger a ‘wait and see’ approach. While Q424 saw some uptick in activity, conditions never developed to the point needed for there to be a critical mass of deals. Instead, Levine sees 2025 as the year of ‘bolt-on’ M&As — smaller, additive acquisitions that enhance the acquiring company’s business, rather than market-rattling transformative deals.
“The era of hot, fast-moving deals that absolutely have to happen right now…we probably aren’t there yet. I think [organizations] will have more time to look around for assets that are going to be the best fit and really pick their spots,” said Levine. “We’re more in a ‘show me’ environment that will be slower, more methodical and well thought out.”
CFOs as collaborators
The role of a CFO continues to evolve, requiring additional skillsets to meet the changing demands of businesses. As cash management becomes increasingly crucial and business optimization gains momentum in 2025, CFOs must now be at the forefront of strategic business decisions, flexing their collaboration muscles with other departments. This includes working closely with the CEO, COO, and other key executives to identify opportunities for cost reduction, revenue generation, and overall operational efficiency.
The importance of engaging in business operations and being an integral part of the organization’s growth strategy can’t be overemphasized. Forward looking CFOs will embrace new technologies and data analytics to provide deeper insights and drive smarter financial planning. These expanded responsibilities highlight the need for CFOs to be dynamic leaders, adept at navigating the complex financial landscape while fostering a culture of innovation and agility within their teams.
More AI use cases in finance
While AI has made its presence known in finance, Levine believes we are just scratching the surface, and more is yet to come. For 2025, he predicts a shift from AI hype to a more practical, ‘show me’ perspective, where real, tangible benefits of AI will become apparent in everyday business operations.
trends
Between the continued evolution of the CFO role, rapid shifts in the way we work and interact, and some unprecedented economic conditions, Levine observes a certain level of fatigue among finance leaders.
Regardless, 2025 and beyond should be seen as a settling-in period as the role evolves, finance teams get used to the increased business scrutiny, and supporting technology gets put to optimal use.
And, as conditions improve, hiring should pick up for most finance departments, helping to ease some of that fatigue that teams are facing. That said, a more competitive market for finance talent has developed and employers will need to show that they have embraced a certain level of transformation to keep up with the pace of business.
“There are definitely going to be talented, young finance professionals that are ready and able to help teams, but who are looking for totally different things from their job than previous generations,” said Levine. “Everyone can offer a competitive vacation or retirement package, but kids out of school want to know what their employers can do for them in terms of teaching, learning and having access to tools that they can use to make their lives better. And if your department is still relying on a lot of manual processes, you can bet that young talent won’t be around long.”