Corporate finance departments, watching the never-ending headlines about inflation and a possible recession, are looking across business units to do what finance is perhaps most known (and hated) for doing: cutting costs. One area where cost reduction has become a game of chess in the current economic climate, some CFOs have reported, is the supply chain.

“There’s a lot of focus right now on the supply-chain dislocation. While the CFO is not directly accountable…indirectly it’s having a massive impact on the cost base,” Ishaan Seth, global co-leader of McKinsey’s strategy and corporate finance practice, told CFO Brew.

And CFOs are trying to decide which levers to pull, while trying to avoid creating more disruptions to their supply chains. Greg Engel, vice chair of tax at KPMG, told CFO Brew that among those decisions, as usual, are potential tax implications.

But sometimes the cheapest option isn’t the best one, especially if it means a company isn’t providing sufficient tax revenue to the places where it does business. Because of the ESG movement’s push for transparency and accountability, many companies’ revenues and business practices are now subject to greater scrutiny.

Tax breaks have been part of many corporate success stories, even if they don’t always pay off for cities and states. But Engel and others tell CFO Brew that especially when it comes to their supply chains, companies are at risk of looking like bad corporate citizens if they’re getting a tax break that appears overly generous. Keep reading here.—KT

Supply-chain disruptions have driven up costs over the past year, and it’s not clear when, if ever, things will get back to normal. And while companies might not want to overhaul their entire supply-chain strategy, renegotiating or revisiting contracts may be an avenue to offset unpredictable costs, Ian Arroyo, CCO of Freightos, a global freight marketplace, told CFO Brew.

“CFOs historically have been very focused on predictability around costs,” Arroyo said. “A CFO has been very comfortable, historically, pre-Covid, with settled long-term contracts, because then they know that they’re paying X dollars per container, or X dollars per cubic meter, period, end of the story for the rest of the year, and so that’s predictable.”

In an effort to mitigate some of the uncertainty, companies have turned to near-shoring and onshoring to try to decrease risk, said Steve Gallucci, Deloitte’s global and US CFO program leader. But long-term contracts could be holding companies back from making quick changes based on the ever changing microenvironment, Arroyo said. Keep reading here.—KT

Stat: $35 million. That’s how much Morgan Stanley has agreed to pay as part of a settlement with the SEC over allegations the company didn’t sufficiently protect customers’ data. (Bloomberg)

Quote: “The subjects in this case weren’t interested in feeding our future… They were interested in feeding their own gluttony.”—FBI Special Agent Michael Paul, announcing 48 people were being charged in connection with the theft of $240 million in pandemic-relief funds meant to go toward meals for children (the New York Times)

Read: Goldman Sachs CEO David Solomon is leading a major transformation of the company, even as some of his bets haven’t yet paid off. (Insider)

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