CFOs’ budgets quickly become outdated amid macro turmoil

Geopolitical shocks like the US-Israel war with Iran result in devastating loss of life. They can also carry major consequences in global trade and commerce, as seen with blockades in the Strait of Hormuz. Thus, it should be no surprise that CFOs are attuned to heightened geopolitical volatility.

Aidana Zhakupbekova, CFO of expense-management software firm Rydoo, said that although organizations may want to increase their investments in areas like technology and R&D, macro issues like geopolitical uncertainty and tariffs make it “much harder to control and plan investments.” (The IMF recently lowered global growth expectations.)

Zhakupbekova recently chatted with CFO Brew about budgeting, visibility into spending, and pivoting quickly to keep down costs.

This interview has been edited for length and clarity.

How do CFOs balance needed investments with controlling costs related to geopolitical events like the war in Iran? Does the war and related disruption in the Strait of Hormuz change the calculus of that balance?

I think there are a couple of things there. The first one is just pure volatility; it’s harder to predict [costs]. For example, Rydoo is a tech company, so we’re not necessarily hit as hard as maybe some manufacturers, but yet even we see the volatility of cost [in] investments…So even within our business, the traditional budgets that I used to do are no longer acceptable, to be honest with you. The quarterly forecast updates can be outdated, too. And we see the same with our clients, especially in heavy industries. They’re hit quite hard, and it’s just harder to plan. In the initial budget, I think all of us are now buffering a lot more than we used to do maybe a couple of years ago.

What does budgeting and forecasting look like now?

I think one thing is certain: I personally can’t wait even for a month to close to see where we’re at. We need to understand how we’re hit. If it’s a little bit over budget here and there, it might be fine, but if you see consistent overspend in the cost category…you need to pivot sooner. You can’t necessarily wait for a month to close or for a quarter to close to do the full business analysis from scratch. You need to be a lot more agile in your decision-making.

Do you see any organizations deciding to hold off on travel for the time being?

I’m not going to speak for all my peers, and I think it’s dependent on the proportion of your FTEs that regularly travel. For some companies like consultants, they probably do more than what we do in our organization. But I could give you a simple example of us, looking at all the volatility in the market right now, potentially changing the locations of some of the in-person meetings, or reducing the number of people who actually have to be there in person versus the ones who could dial in.

We postponed some of [our] internal events. Those are rarely the customer events. But, anything we do with the exec calls and even the company kick-offs, you name it, [we] absolutely decreased or postponed throughout the year to see if maybe we get to a better state or a more predictable state, although I’m not sure that’s going to be the case anytime soon.

I don’t envy being in the position to make these decisions right now, because it seems difficult to predict what the next big event is. I don’t know how you can plan around that unpredictability as a CFO.

I don’t think you can, to be honest with you. There are decisions to be made of either lower targeted growth, at least for this year, and maybe evaluating your whole supply chain and having more flexibility with your contracts, or maybe renegotiating the prices where possible. But you can imagine, none of this happens overnight, especially the global contracts. It’s definitely taking quite a lot of time to mitigate for that, but at least having the information, I think, helps.