2025 financial risks: What a CFO wants you to know

We know accounting isn't all numbers and spreadsheets. It's also about helping clients feel confident about the future, keeping employees engaged and getting college students amped up to join in the fun.

This week, we interviewed an experienced fractional CFO about potential financial risks in the year ahead, with suggestions on how to advise your clients. Plus, we've got details on AI-driven fraud and why some accountants say "no thanks" to high-maintenance clients.

A fractional CFO's take on preparing for uncertainty

The U.S. economy is in a good place right now—at least according to Federal Reserve Chair Jerome Powell. Still, a new administration, lingering inflation, ongoing geopolitical tensions and concerns about future climate change impacts mean it's impossible to say with certainty what 2025 holds.

So, how do you help clients prepare? The Net Gains sat down with John Frank, founder and CFO of Third Road Management. With years of experience as a fractional CFO, Frank is known for delivering strategic insights and practical advice. Here, he shares his outlooks on financial risks, cash flow strategies and forecasting best practices for the year ahead. -Janet Berry-Johnson

What are the most common financial risks you foresee for businesses in 2025?

Interest rates are still high, and the Federal Reserve recently paused interest rate cuts. I think this will translate to extended pauses on capital spending purchases and projects that have been on hold. I also believe that higher interest rates may cause the M&A market to be slower to pick up than many people have hoped for in 2025. The new administration is also seemingly emphasizing reductions to the size and spending of the government, so any businesses that have concentrations with clients that are U.S. government-related may want to be prepared for any additional pullbacks.

How can accountants support clients in building stronger cash reserves and improving liquidity as a safeguard against economic downturns?

A general rule of thumb is to have three months of operating cash on hand at any point in time. That doesn’t mean some of it can’t be invested in liquid, short-term investments that can be made available if needed. I also think all businesses need to remain vigilant about managing working capital. Remember, collect fast and pay slow. Don’t let customers build up past-due balances without cutting them off. Lastly, I’d just say have a plan in place that you’re ready to enact quickly. Know which costs you would cut, etc., if necessary.

How can small businesses adjust their financial forecasting or budgeting practices to better prepare for potential fluctuations in the economy?

I think running base, growth and conservative case scenarios is always advised. Your growth case scenario should feel like it is stretching but also achievable. Your base case should reflect stability and/or modest growth. Your conservative case should illustrate your business’s sensitivity to a downturn. Beyond these annual models, maintaining a rolling 13-week cash flow forecast is always a best practice.

Risky business: Managing retired partners' liability

When a firm partner retires, their influence doesn't disappear overnight. Clients may still seek out their advice, and if not handled properly, this exposes the firm to liability under the concept of "apparent authority," according to J. Michael Reese, J.D., LL.M., a risk consulting director at CNA Insurance.

What can the successor do? You can reduce risk by formally transitioning clients before a partner's departure, creating a clear separation post-retirement and restricting access to firm resources. And don't forget to update firm directories and collateral materials and train staff on handling client questions.

Why this matters: Understanding apparent authority helps prevent costly legal and reputation issues. A few proactive measures can create a smooth transition while protecting the firm from unintended liability. (Journal of Accountancy)

Making accounting cool again

Accounting isn't just about numbers—it's about influence, relationships and solving real-world problems. A recent episode of The Unique CPA Podcast features Greg Adams, Senior VP and CFO of the American Management Association and author of Green Shade$, a financial thriller featuring an accountant as the hero. Adams shares his passion for reshaping the perception of accounting, emphasizing the need for strong soft skills, critical thinking and storytelling.

Why this matters: Every firm feels the effects of the declining number of CPA exam takers. If soft skills can help attract new talent to the profession, this episode is a must-listen. (The Unique CPA Podcast)

A tax season like no other? Forbes senior writer and tax attorney Kelly Phillips Erb changes her tune on whether the new administration will have an immediate impact on the 2025 tax filing season.

Scale without losing your soul. Maintaining culture is a challenge as firms grow. But it's possible to keep employees engaged and aligned with firm values—even during rapid expansion.

Too sexy for accounting? PASBA president Erin Andrews argues in a LinkedIn post that low-fee, "vanilla" clients are actually a lot sexier than higher-fee, high-maintenance clients. Agree?

More lessons from the Bench. Breaking down the takeaways for accountants and business owners who want to avoid shutting down due to pricing, scalability and financial sustainability.

College athletes aren't the only ones with opportunities. Name, Image and Likeness (NIL) deals are booming, and college athletes need help navigating the tax obligations.

100

The age New Mexico residents must reach to become exempt from paying taxes. (Taxation Revenue New Mexico)

Tariff talk: Policy experts weigh in on whether President Trump's tariffs could (and should) replace income taxes.

AI advantage: Large firms integrate AI to streamline workflows and improve client service.

NYC Mayor audit: Investigators probe potential mismanagement in campaign finances.

Money matters: Colleges and universities (finally) add personal finance courses to prepare students for the real world.

Fraud surge: AI fuels a rise in cyber fraud, creating new risks for businesses and their advisors. 

Coaching for career growth

Developing technical skills is essential in accounting, but true career advancement requires more. A structured coaching program bridges the gap between learning and applying that knowledge, giving newly hired talent ongoing support as they build leadership, communication and business development skills.

Unlike one-off soft skills training sessions, coaching provides accountability, helping professionals set and achieve meaningful career goals over time. 

Why this matters: For accounting firms feeling the sting of talent shortages and retention challenges, investing time and financial resources into coaching programs helps accountants build their skills and supports engagement and career satisfaction to reduce turnover. (Inside Public Accounting)

The Net Gains is your one-stop shop for fresh, FREE accounting insights. You can reach the newsletter team at thenetgains@mynewsletter.co. We enjoy hearing from you.

Interested in advertising? Email us at newslettersales@mvfglobal.com

 If you've been enjoying the newsletter, don't keep it a secret. Share it with an industry colleague. (Copy the link here.)

The Net Gains is curated and written by Janet Berry-Johnson and edited by Bianca Prieto.