Finance leaders flag top challenges for new financial year
High operational costs, intense competition and ongoing regulatory changes are some of the major concerns among finance leaders for the 2024–25 income year.
A recent report by workforce management platform Rippling has revealed what finance leaders are expecting to be the top challenges for the new financial year.
The report, based on a Census-wide survey of 500 Australian business leaders, found that high operational costs are the top concern with 40 per cent of finance leaders identifying this as a challenge.
This was followed closely by intense market competition at 36 per cent and ongoing regulatory changes at 33 per cent.
The research also examined the top priorities for finance teams this year with the report revealing that revenue growth and increased productivity as two of the major goals for businesses next year. This was followed closely by employee satisfaction.
Rippling VP and head of Asia, Matt Loop, said the spectre of stagnant business productivity continues to cast a long shadow over the Australian economy but improving efficiency and output will be key to overcoming businesses' economic and market pressures in FY25.
“Technology will play a key role in facilitating this change, whether that be making it easier for companies to consider global expansion or improving efficiency and eliminating the time burden of administrative tasks,” Loop said.
The survey indicated that Australian businesses are also increasingly setting their sights on international expansion to drive growth and enhance their competitive edge – with almost two-thirds looking to expand to global markets in the next financial year.
The US and UK have emerged as the top destinations for expansion, surpassing neighbouring countries such as New Zealand and Asia.
Of companies looking at establishing a presence in international markets:
- In the US, a quarter (26 per cent) are in exploratory stages and 19 per cent are activating their landing team.
- In the UK, 21 per cent are in exploratory stages and 22 per cent are activating their landing team.
- In New Zealand, 17 per cent are in exploratory stages and 15 per cent are activating their landing team.
The findings also reveal the strategic foresight required to overcome the inherent complexities and challenges of international expansion.
Australian companies listed cost of expansion (35 per cent), managing teams across different time zones (32 per cent), ability to hire the right talent (29 per cent) and learning the complexities of local laws and regulations (29 per cent) as their top concerns.
Additionally, one in five (19 per cent) would be worried about negative perceptions of Australian business productivity.
As companies look to expand into global markets, they are also looking to benefit from a global workforce with specific market expertise and knowledge.
Over two-thirds (69 per cent) of Australian businesses are looking to hire globally in the next 12 months. Contrary to popular belief, accessing lower labour costs (36 per cent) was not the primary driver for this wave of global hiring.
Instead, Australian businesses are predominantly hiring internationally to support their presence or expansion in global markets (44 per cent) and increase productivity (43 per cent).
Rippling said the growing complexity and demands of recent industrial relations reforms, such as the Right to Disconnect, are also beginning to take their toll on Australian businesses and influence local hiring decisions, with 37 per cent citing them as a key driver behind their decision to hire globally.
“This was of particular concern to finance leaders, with almost half (49 per cent) identifying it as a motivator to their choice to pursue global hiring,” the software firm said.
The findings also showed that as AI and automation continue to dominate mainstream discourse, Australian businesses are increasingly turning to technology as a critical enabler in the quest to increase business productivity.
Three-quarters (74 per cent) of respondents agree that investing in technology improves a business's productivity and 36 per cent consider it to be the top business objective of their technological investments, followed closely by improving security (35 per cent), increasing operational efficiency (34 per cent) and reducing costs (34 per cent).
