CFO challenges in 2025: How to balance financial strategy and compliance

CFO challenges today

Navigating a rapidly evolving regulatory landscape, ensuring data privacy and security, ESG reporting. All significant challenges which CFOs must currently tackle, alongside maintaining financial stability, driving growth, lowering costs and maintaining shareholder confidence. And that’s before we even get to the impact of unstable financial markets, geopolitical disturbance, and the looming prospect of trade wars.

Deloitte’s latest survey of UK CFOs shows business optimism fell to a two-year low in the fourth quarter of 2024. A net 26% of CFOs reported feeling more pessimistic about the prospects for their business.

CFO challenges have always included compliance, but at a time of such uncertainty balancing financial strategy and compliance obligations is one of the biggest challenges they face today.

Financial strategy v compliance

Playing by the rules has never been more important or more challenging for CFOs.

Here’s just some of the compliance concerns they are contending with right now:

• Tax and national insurance reforms
• Company and employment law reforms
• Anti-money laundering (AML), fraud, and other financial crime prevention legislation
• Know Your Customer (KYC) and Know Your Business (KYB) requirements
• Rapidly evolving Environmental, Social and Governance (ESG) reporting
• Cybersecurity and data regulations
• Adherence to fiduciary duties

However, cost pressures are a significant barrier to implementing effective compliance measures – CFOs have trimmed expectations for corporate investment and discretionary spending in 2025, with 52% reporting that they are reducing costs.

So too are time and resource considerations. The onerous nature of compliance can take precious time and attention away from financial strategy, which can be damaging in terms of decision making, meeting shareholder expectations, and delivering on growth opportunities.

Indeed, as a result of the pace with which regulation is moving, just 5% of mid-market CFOs believe their firms are fully prepared for future regulatory changes, and nearly a quarter report that regulatory pressures are intensifying uncertainty for their businesses.

A cautionary tale: BHS 2024 litigation

The 2024 litigation following the collapse of British Home Stores (BHS) highlights the need for CFOs to maintain robust compliance and governance during times of uncertainty and financial distress.

At the end of a five-week High Court trial, the Judge held that as a result of misfeasance BHS directors had unjustifiably caused the already-insolvent retailer to increase its financial deficit by £140 million.

Five lessons can CFOs learn from BHS:

1. CFOs must adhere to fiduciary duties – directors were found guilty of wrongful trading and misfeasance, for continuing operations despite the likelihood of insolvency
2. CFOs must prioritise shareholder and creditor interests – financial decisions must always be in the interests of shareholders (or creditors when insolvency is likely) – failure to do so can result in personal liability
3. CFOs must implement robust corporate governance – this case highlights what can go wrong when there are persistent due diligence and oversight failures. CFOs must implement stringent governance policies and procedures to ensure regulatory compliance and mitigate financial risks
4. CFOs must act quickly on insolvency – continuing to trade when insolvency is likely can only serve to exacerbate losses and increase liabilities. CFOs must critically address operational viability and act quickly to protect creditors.
5. Seek legal advice – legal advice is vital to balancing financial strategy and compliance obligations – not only can expert advice ease the burden and provide crucial guidance for CFOs, but it is also a critical support during times of financial uncertainty.

This brings me nicely on to…

How can external counsel help CFOs successfully balance financial strategy and compliance?

Here’s what expert legal advice should look like in practice:

• Interpretation of complex regulatory and legislative reforms
• Early identification of potential compliance risks
• Support to ensure financial strategy is aligned (not competing with) corporate governance activities
• Legal support during regulatory investigation
• Advice and drafting of robust and compliant financial contracts
• Expert oversight of all financial transactions and investments
• Compliance with multi-jurisdictional regulations across all territories of operation
• Dispute resolution / litigation of any financial disputes or breaches of fiduciary duty
• Risk management and governance policy development (both internal and external)
• Support with all regulatory reporting requirements
• Legal advice and assistance in insolvency matters including mitigation of insolvency risks, corporate governance support and restructuring plans

Here at Leverets, we also appreciate that legal advice is a cost centre in itself. 

Rather than adding to the difficulties of balancing financial strategy with compliance, the right law firm can expertly guide CFOs through day-to-day matters of regulation and handle complex financial issues quickly, efficiently and cost effectively, as well as provide a constant stream of best-practice advice to help drive growth.

How can Leverets help CFOs?

The broad expertise of the barristers and solicitors who make up the uniquely-combined Leverets’ team means we can work across both litigation and transactional matters for CFOs, seamlessly blending strategic and advocacy skills to ensure balancing financial strategy and compliance is as pain-free as possible:

• Company and commercial litigation
• Corporate insolvency
• Civil fraud

Looking for a new approach? 

Get in touch. We love nothing more than a good chat about the issues business are facing in 2025, and how we can help solve your biggest challenges.