Small and medium-sized businesses in the U.S. expect to ramp up their spending on finance and accounting software this year by nearly 14% on average, according to a survey from finance technology firm Datarails.
The average amount of finance software spending by these companies is expected to hit $54,308 in 2023, up from $47,758 last year, according to a report on the survey results, released Wednesday. The need for consolidation, automation or better data is a top factor (38%) driving the spending increase, followed by a need to strengthen business value (20%) and a desire to generate growth amid macroeconomic headwinds (17%).
“Despite the challenges posed by the economic downturn, CFOs are investing more in their tools, not less,” the report said.
The Datarails report aligns with other recent studies showing a heightened technology focus among CFOs.
In a survey released last month by OneStream, another finance tech company, the overwhelming majority of respondents (91%) said their organizations were either investing in or planning to invest in new software tools designed to support finance functions.
“The current economic headwinds have finance leaders acutely aware of their investment decisions and weighing the benefits versus the costs,” OneStream CFO Bill Koefoed said in a press release at the time. “With revenue growth through economic uncertainty in mind, financial leaders are looking to invest in solutions that can support more agile decision-making, while delivering a fast return on investment.”
According to the Datarails report, only 6% of CFOs believe there won’t be a recession in 2023 while 52% single out rising interest rates as their biggest obstacle to company growth. Nearly half (48%) of respondents said that a combination of difficulties — including rising interest rates and inflation — has contributed to the current environment being the most challenging time of their career.
Finance software investments by larger finance teams this year are expected to exceed those of smaller ones, the report said. Companies with larger finance teams of at least 20 employees will spend almost $70,000 on average compared with smaller teams, which expect to spend an average of anywhere from $46,586 to $48,614.
Survey respondents rated accounting software or enterprise resource planning systems as their top “must-have” technology (61%), followed by payroll systems (48%); tax software (37%); accounts payable and accounts receivable systems for payments, customer invoicing and collections (23%); financial planning and analysis solutions (19%); and spend and expense management tools (15%).
The survey is based on responses from 260 CFOs at small-and-medium-sized businesses from across the U.S. The respondents represented companies ranging in size from between 50 to 1,000 employees.