STRATEGY

Amrita Ahuja

For financial services giant Block, shifting business models via a reorganization in 2024 has allowed it to better serve both merchants and consumers, CFO Amrita Ahuja told CFO Brew.

Its well-known fintech apps—Square (point of sale), Cash App (mobile P2P payments and investing), and Afterpay (buy now, pay later)—now have “a shared infrastructure and shared even talent—people at the company who are thinking about the brands collectively…What that allows us to do is look for the connecting points across the brands, things that we can uniquely do because we serve both sides of a network,” Ahuja, Block’s CFO for more than seven years, said.

Block recently reported record profitability and raised its yearly outlook; it’s now expecting gross profit of $12.5 billion, up 21% year over year. Ahuja told CFO Brew about the impacts of hardware and memory price increases on Block’s business, what stood out in the company’s second-quarter performance, and how Block is leveraging AI.

How have heightened hardware and memory costs affected Block?

When we go back to, what are the things that are unique about Block relative to our competitors, I would say our hardware capabilities is one of those things. The fact that we have such deeply integrated hardware, software, and commerce capabilities, that we haven’t outsourced this to some other company that’s an expert, but built our own expertise…The memory shortage and associated cost increases are pretty unprecedented for this time. We can mitigate the negative impacts of a moment like this because we are so deep in the supply chain, and we have direct connections not only to our suppliers for hardware and memory and chips, but to our suppliers’ suppliers, and to their suppliers.

Block’s IR bot is making communication with retail investors easy, Ahuja says.—DL

      

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RISK MANAGEMENT

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Finance leaders and CFOs are feeling the effects of foreign exchange swings in their payroll costs.

New market research from global payments and employment platform Native Teams found that, among more than 500 senior North American finance leaders at companies with 50 to 1,000 employees, 97% reported that foreign exchange costs directly impacted their payroll costs in the previous 12 months. (The survey took place in May and June.)

Indeed, 45% of those surveyed “saw payroll costs swing 2%–5% against forecast in a single month due to FX movement alone,” which Native Teams called a material variance.

“Payroll has quietly become one of the most exposed parts of scaling up to the global market,” Jack Thorogood, Native Teams CEO, said in the report. “Once it runs across multiple banking systems, currencies, and compliance rules, it stops behaving like a payroll workflow and starts behaving like a holistic financial infrastructure—and 77% of finance leaders now agree they’re carrying that risk.”

Offshore ventures. Karthik Krishnamurthy, CFO of tax, assurance, and advisory firm Smith + Howard, has seen this play out firsthand. Krishnamurthy told CFO Brew via email that the firm’s “near-term priority has been to build out our India office, where we’ve added more than 150 colleagues.”

Payroll cycles can mean extra manual work for finance teams when foreign currencies are involved.—DL

      

BENEFITS

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If HR leaders are holding onto any notion that only full-time, salaried workers are interested in contributing to a 401(k) plan, it’s safe to say they can retire that belief.

New research from payroll and benefits platform Gusto finds that the share of small businesses offering a retirement plan has grown steadily over the last seven years, with a notable pickup among those in sectors with high shares of hourly workers.

Some 31% of small businesses now offer a retirement plan to their employees, up from 19% in 2019, according to Gusto. Industries where retirement plans were rare prior to the pandemic, such as hospitality, recreation, and agriculture, saw adoption grow by more than 100% during this time period (hospitality alone saw a 200% increase). Unsurprisingly, more hourly workers now have access to a retirement plan as well, with the share of employees in this category rising to 38%, up from 21% in 2019.

What’s more, “most of that growth has been happening at the very smallest employers,” with fewer than five or 10 employees, Nich Tremper, head of Gusto Insights and a senior economist with the company, told HR Brew.

The SECURE 2.0 legislation helped drive adoption, HR Brew reports.—CV

      

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market forces

Francis Scialabba

Today’s top finance reads.

Stat: More than $40 trillion. That’s the size of the US national debt, which crossed into this territory for the first time. (the New York Times)

Quote: “It is a big deal for the field in general. If this trial was negative, the field of mRNA-based cancer therapies and cancer vaccination may never have recovered. With this positive study, there is hope (and likely investment ‌to ​follow) that these approaches may change the way we treat cancer ⁠more broadly.”—Dr. Ryan Sullivan, Mass General Brigham Cancer Institute, on Merck and Moderna developing a personalized cancer vaccine (Reuters)

Read: Fannie Mae, the government-backed mortgage company, has seen at least 10 senior executives exit. Some execs were reportedly told last week that their positions were eliminated. (the Wall Street Journal)

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