Recently, I outlined key factors a CFOs should focus on in 2022. But, one thing that can throw a wrench into every organization’s planning and forecasting is inflation.
The pandemic created the perfect storm of supply vs. demand. The combination of pandemic-related shortages and backlogs and pent-up demand has inflation rising to a level unseen in decades. And it’s not expected to ease up any time soon. Instead, prices will likely continue to increase as long as suppliers struggle to keep up with the demand for goods and services.
Inflation like this hasn’t been seen since the 70s and 80s. And while it may be new to many of today’s CFOs, there are plenty of solutions financial teams can implement to curb the impact of inflation on an organization.
The need for digital technology started way before COVID. But the rippling effects of the pandemic have emphasized the need for a digitally fluent financial team. A company can’t afford to wait for quarterly forecasting with manual spreadsheets to determine its financial health. Businesses need to react quickly to volatile market situations to keep pace and remain competitive.
People are paying more for everything right now, including business owners. So, for many businesses these days, the question is not if they should raise prices but when. Regardless, price increases should be done with subtlety. After all, a significant increase could mean losing customers. And that would be counterproductive.
Create a contingency plan
Now’s the time to form relationships with new vendors and build avenues of redundancy. Companies that grow their network of suppliers don’t just increase their bargaining power; they become less exposed to supply chain disruption. And many supermarket chains and big-box retailers learned all about supply chain disruption the hard way with the toilet paper shortage at the start of the pandemic. Rising inflation is creating more uncertainty for many financial teams managing already insecure businesses. Miami CFO has the executive-level insight and financial perspective to help you navigate the ongoing challenges of today’s business environment while pointing you toward a brighter future. Use this link to schedule a meeting and start the process: https://calendly.com/miami-cfo