The pressure on CFOs to manage costs has never been higher. Economic uncertainty, political upheaval, and muted economic growth make it increasingly difficult to balance financial discipline with growth initiatives.
A recent Boston Consulting Group (BCG) survey of 570 C-suite executives found what many of us are seeing anecdotally across companies from almost every sector. Executive cost reduction is now top priority, coming in at number one for one-third (33%) of executives, an eight-percentage-point increase from last year.
Yet, despite this heightened focus, most companies fail to meet their cost-saving targets. On average, they achieve just 48% of their intended reductions, with many struggling to sustain efficiencies beyond two years.
This signals a major problem. Cost-cutting alone is not a strategy. CFOs who approach cost control purely as an exercise in slashing expenses risk weakening their company’s long-term growth potential. Instead, successful leaders are rethinking cost management as a productivity tool that can optimize operations, maximize cash flow, and fuel reinvestment.
So, what’s the right approach? Let’s take a closer look.
Cost Control vs. Cost Cutting
The natural response to financial pressure is often to cut costs aggressively. But the most effective CFOs know that cost control isn’t just about cutting, it’s about analyzing and prioritizing where to focus investment to maximize growth. In fact, according to the BCG survey, 67% of executives plan to reinvest savings into different areas within the business.
So rather than being about simply reducing costs overall, it’s about ensuring that funding is going where it has the biggest impact. As a result, it’s no surprise BCG found that companies that fail to meet their cost targets underperform their peers in total shareholder return by an average of 9 percentage points.
But slashing budgets without a strategic plan can create even bigger problems, leading to higher costs down the line. If reductions aren’t paired with automation or process improvements, finance professionals are left doing more work with fewer resources, increasing burnout. Cutting too deep into critical areas like supply chain resilience or digital transformation can also make a company vulnerable to competitive threats.
To avoid these problems while still managing costs, leading CFOs are leaning into the growth potential of cost controls, rather than just focusing on cutting the bottom line. They are looking at cost control as an opportunity to improve financial visibility, optimize operational efficiency, and create a leaner, more resilient business model.
The Biggest Cost Drivers CFOs Are Focusing On in 2025
The BCG survey highlights several key areas where finance leaders are prioritizing cost optimization efforts this year:
Supply Chain Optimization
The study was completed in January 2025, and since then, supply chain concerns have definitely not improved. Supply chains are under relentless pressure from geopolitical crises, shifting trade policies, and sustainability regulations. It seems like every day brings the announcement of a new tariff or trade standoff.
Companies are having to reassess supplier relationships, reviewing margins, looking for alternative sourcing options, and leveraging real-time data to track cash flow tied up in inventory and logistics.
Advanced forecasting is proving to be a major benefit in assessing how these shifting tides could impact the bottom line, and assess how different strategies could affect costs and profitability.
Product Portfolio Simplification
In every industry from candy to gaming to tech to cars, expanding product lines can drive complexity and increase operational costs. That’s fine during boom times when consumer demand is high, as product differentiation can help drive additional revenue.
However, when belts tighten, many consumers and businesses go back to basics, leading to less demand for non-core product offerings.
Many executives are now rationalizing their portfolios, cutting underperforming SKUs, and focusing on high-margin, core offerings. Simplified product strategies reduce overhead, streamline logistics, and improve profitability.
This is a great example of how cost controls don’t have to mean broad brush cuts. Reducing underperforming or less profitable areas of the business frees up resources to be spent where there’s more potential for increasing profits.
Operating Model & Workforce Productivity
Technology has a huge part to play in improving productivity and efficiency. Inefficiencies in financial operations, like manual reconciliations and fragmented reporting, are a hidden drain on resources, and tools like AI and machine learning can help reduce time and costs.
Automating key financial workflows can help eliminate manual errors (more low-hanging fruit for managing costs) and reduce time spent on routine tasks. By improving cash visibility and automating expense tracking, finance teams can redirect their efforts toward strategic planning instead of administrative work.
Sales & Marketing Optimization
Finance leaders are scrutinizing customer acquisition costs (CAC) and reallocating spend toward the most effective marketing channels. Again, during times of milk and honey, marketers have more leeway to try new things and take marketing gambles. But right now, every dollar needs to be accounted for attributable to potential revenue.
Post-sale, companies are also looking to reduce unnecessary overhead in customer service while investing in data analytics to improve retention and lifetime value (LTV).
Embedding Cost Awareness into Daily Finance Operations
A successful cost strategy needs to be embedded into daily operations rather than a one-time initiative. Not only does that make it less effective, but it’s the fastest way to destroy company morale. According to BCG, companies that foster a culture of cost awareness see up to 11% higher efficiency in cost-reduction initiatives.
Keep your people informed and involved, and cost reduction becomes a flywheel, rather than a stone to push uphill.
Here’s how CFOs are making that happen:
Real-Time Financial Visibility
A company can’t control costs effectively if it doesn’t have full visibility into its cash flow and cash balances. But better data visibility shouldn’t mean finance teams spending hours more each week on collating data, as that flies in the face of any efficiency drive.
Instead, finance leaders should prioritize automated treasury tools that aggregate and categorize financial data across multiple bank accounts, geographies, and business units. This eliminates the time-consuming process of manually compiling financial reports, giving instant access to key insights, without additional time.
Smarter Scenario Planning
Uncertainty is a given, especially at the moment. Scenario planning has always been a fundamental component of good financial management, sophisticated modelling tools and AI-driven scenario planning can now model the impact of different cost-control strategies quicker and easier.
It means the ability to look at more scenarios and more complex scenarios, to better plan for what’s ahead. This helps stress-test financial assumptions, forecast cash flow under various economic conditions, and proactively adjust spending.
The result is that instead of making reactive cuts, you can confidently allocate resources where they will have the most impact.
Aligning Finance and Operations
And, of course, cost controls have real-world impacts on the rest of the business. A deleted line item on a spreadsheet means someone, somewhere in the company, has it removed from their day-to-day workflow.
So obviously, it’s very important to get this right, or risk cost cuts causing problems and frustrating employees. It’s yet another reason why cost controls need to be managed as a collaborative effort across the business. With finance partnering with operations, procurement, and sales teams, they can ensure that cost initiatives align with business goals.
This cross-functional collaboration can even help identify inefficiencies that might not be obvious from a purely financial perspective.
Why Now Is the Time to Get Cost Control Right
As the saying goes, ‘control the controllables’. While a company can’t influence tariffs, consumer demand or natural disasters, it can control its costs and ability to sustain itself through volatile times. Companies that proactively optimize their financial operations will be in a stronger position to reinvest in growth while their competitors struggle to keep up.
The takeaway? A smarter approach to cost management isn’t just about spending less — it’s about spending better.
For CFOs, Treasurers, and finance leaders looking to gain a clearer picture of their financial position, optimize cash flow, and make more data-driven cost decisions, real-time financial tools are becoming a must-have, not a nice-to-have.
To see how Trovata could save you time and money while deepening financial insights and forecasting, book a demo today.
