“Uncharted waters” ... “Economic uncertainty” ... “Unprecedented times” ... Just when you thought Pandemic-era panic phrases had been buried for good, they seem to be surfacing again with a new level of intensity. Only this time it isn’t a virus that’s stirring commotion in the corporate office – it's tariffs, trade wars, and turbulent times.
As macro-economic turmoil becomes less of a flashpoint and more of a persistent pattern, CFOs are increasingly the authority to turn to. How should we respond to tariffs? How do we prepare for a potential economic downturn? What are the best ways to protect financial stability? In answering these questions, it helps to look at the common viewpoints of CFOs today:
- 71% of finance leaders have an unfavorable outlook on economic growth, according to a recent Gartner poll as published by CFO Dive.
- The vast majority of CFOs will increase their prices – 59% expect their organizations to absorb less than 10% of tariff impact in their cost-base, according to that same Gartner poll.
- 25% of CFOs are tightening their belts, cutting capital spending, and slowing hiring due to tariffs, according to another survey published by Fortune.
In response to today’s realities, financial leaders are pivoting their projections, adjusting their strategies to protect long-term profitability, and prioritizing new agendas. Let's explore some key considerations that can help in these efforts, enhancing financial resilience as companies attempt to increase prices without threatening customer loyalty.
Turbulent Times Call for Clearer Views, Sharper Accuracy, Tighter Controls
There’s a variety of ways to prepare for potential economic downturns, but here are some top considerations.
Real-Time Views: From balance sheets to income and cash flow statements, CFOs should have their finger on the pulse of their financial situation with assets, liabilities, and equity as the main headlines. But are your reports up-to-the-minute current, and how are you bridging disparate systems to get the most accurate view of your financial health? Outdated information, manual data entry, and different data formats can lead to discrepancies that can undermine forecasting accuracy and mislead critical decisions at a time when situations are changing daily.
Accuracy through Big Data Aggregation: Siloed approaches are no longer effective when the goal is to analyze more factors together rather than review a list of isolated risks. The sharpest accuracy comes from reports backed by integrated risk management. Unified data management, integrated systems ingesting data from multiple sources, and reports delivering overarching views help CFOs see across the AP and AR lifecycles to manage risk holistically. Evaluating both internal and external data can also be helpful as CFOs monitor their own performance against larger trends in the market.
Generative AI is also a huge help, as CFOs can ask complex, multi-factor questions and get instant answers alongside suggestions for improvement. Get the CFOs guide to Generative AI.
A Tighter Grip on Buyer Risk: Clients can be a valuable source of early warning signals used in risk management, but you must have the right listening tools. The problem with traditional credit risk models is that they rely on historical, backward-looking data, when CFOs need to predict future risk. Plus, outdated credit scores aren’t always contextualized with other data, meaning conclusions are built on point-in-time data from only one source. The result is misinterpretation.
Instead, the best approaches use real-time, multi-source data analysis combined with AI-powered predictive analytics and solution recommendations. This way CFOs can outpace these threats with proactive alerts and suggestions in how to respond.
Collect Faster, Pay Slower: Liquidity risk management is another key recession strategy, as I discussed in my previous article. When payment terms, policies, and collections are managed properly, companies can achieve the financial agility they need to “float” their business. A recent Vanson Bourne study finds that AR automation software helps companies of all types accelerate cash flow by +40%. At a time when economics are unstable, extra padding and discretionary funds set aside to cover the unknown can make all the difference in those sleepless nights.
Passing on Your Tariff Costs? Soften the Blow with These Tips
As the data shows, price increases will be the preferred strategy for mitigating the cost of tariffs. That’s because raising prices is far easier than rebuilding supplier networks or reconfiguring manufacturing footprints. But when it comes to breaking the bad news about higher prices, best practices should be applied to soften the blow to customers. As a company processing $1T – yes trillion with a T – transactions on behalf of our clients, Billtrust has learned some valuable lessons about credit card surcharging that can easily be applied to tariffs.
Best Practices for Tariff Surcharging
- Contrary to common misconceptions, credit card surcharging doesn’t necessarily alienate customers. For what it’s worth, this serves as a sliver of hope that as tariff surcharging becomes as common as credit card fees, demand may hold steady.
- Structuring costs transparently in your invoicing practices is of utmost importance. When surcharging is done clearly—by communicating the charges and their sources upfront—customers appreciate the clarity and candor.
- As with any increase in pricing, changes should be presented alongside reminders of the choices your customers have in their payment options. This can foster the impression of control, even when surcharges are non-negotiable. It’s considered a proven technique to preserve high-quality customer experiences.
And one last side note: Start now... Be prepared to pass tariff costs or be stuck “eating” them. Ask what is needed to adjust invoice formats to accommodate surcharges. No one wants to receive back-dated tariff charges.
It can never be too early to make room in your invoices for tariff surcharges, but it can be too late.
When Cost-Cutting, Look at Your Manual Processes Too
Reducing discretionary spending and capital investments are go-to strategies, and expense sheets come under quick fire in tough times. But CFOs shouldn’t forget to consider the cost of their productivity losses due to manual work. Financial operations are fraught with homegrown, hand-operated procedures that bog down invoicing delivery, cash flows, and collections.
Investments in AI automation continue despite conservative views and spending cutbacks. Billtrust surveyed 550 finance professionals, finding that 67% are dedicating over 10% of their 2025 budget to AI automation – even in today’s climate. That’s because the benefits of AI progress beyond simple automation and productivity gains. Data shows 90% of financial decision-makers now rely on AI for financial decisions, and 83% report AI has positively influenced their approach to managing financial risk.
In an atmosphere of economic changes and increased pressure on financial stability, every CFO needs their team to be spending their time assessing more areas of risk more often – not investigating more mismatched data and handling higher volumes of AR exceptions.
Financial Stability: Agility is the Secret to Staying Power
CFOs must adopt a proactive and strategic approach to navigate the challenges resulting from macro-economic instability. By ensuring real-time accuracy in financial forecasting, leveraging big data for holistic risk management, and using best practices with tariff surcharging, CFOs can enhance financial resilience. Additionally, maintaining a tight grip on buyer risk and liquidity will provide the flexibility needed to weather economic storms. As we move forward, the ability to adapt and respond swiftly to will be crucial for steering through turbulent transitions.
FAQ
Credit card surcharging involves adding a fee to transactions paid with a credit card. This additional charge helps businesses cover the costs of credit card processing fees.
Tariff surcharging refers to the practice of adding an extra charge or fee to a product or service to cover the cost of tariffs, which are taxes. For suppliers this practice offsets the impact of taxes, but for buyers it means higher prices for goods and services.
Generative AI is a type of artificial intelligence that uses large language models to create new content based on its training data.