In keeping with U.S. Bank’s 2022 CFO Insights Report, finance leaders’ priorities have shifted as they work to assist information their companies via uneven waters.
The highest-line survey outcomes revealed that enhancing danger identification and mitigation is now a prime precedence for 30% of finance leaders, whereas in 2021, danger administration was the least recognized prime precedence (18%). As well as, driving income development is a prime precedence for less than 21% of finance leaders this 12 months, whereas in 2021, driving income development was a prime precedence for 35% of leaders.
Thirty % of finance leaders mentioned chopping prices and driving efficiencies throughout the finance perform is a prime precedence, whereas 29% of finance leaders mentioned chopping prices and driving efficiencies throughout the whole enterprise is a prime precedence.
Relating to chopping prices, simply 22% of finance leaders plan to scale back headcount throughout their enterprises, down from 40% in 2021. As an alternative, finance leaders plan to chop prices by investing in know-how (37%), discontinuing low-margin/low-growth enterprise traces (32%) and outsourcing sure enterprise capabilities (29%). The automotive and transportation trade was almost definitely to scale back headcount to chop prices, whereas the chemical substances and superior supplies, skilled providers and know-how industries have been least seemingly.
The shortage of urge for food to chop headcount is likely to be defined by the highest enterprise danger recognized by finance leaders: expertise shortages, which have been recognized as a prime danger by 40% of finance leaders. The outcomes have been almost similar for companies with greater than $1 billion in income (41%) and people with much less (40%). Expertise scarcity dangers have been forward of dangers posed by the tempo of digital disruption (36%) and excessive inflation (34%). Simply 17% of respondents mentioned rising rates of interest have been a prime danger.
Relating to expertise scarcity dangers:
- 51% of respondents are assessing future ability necessities.
- 42% are reviewing salaries and different worker advantages.
- 42% are exploring alternatives to automate guide processes.
- Simply 18% are providing hybrid working for sure roles to handle expertise dangers.
“Our purchasers within the CFO workplace are going through a barrage of challenges — with new ones rising seemingly day by day — as they assist information their companies via a really unsure exterior setting,” Stephen Philipson, government vice chairman at U.S. Financial institution Company & Business Banking, mentioned. “Finance leaders ought to take this chance to play an much more important position in danger administration, making certain they’ve an applicable technique to play protection whereas persevering with to develop the underside line.”
Fewer than 15% of finance leaders are extremely assured of their firm’s skill to handle any of the recognized enterprise dangers from the survey. For instance, simply 4% are extremely assured they’ll handle excessive inflation. As well as, relating to managing excessive inflation:
- Nearly all of respondents (57%) are figuring out alternatives to chop prices, however fewer than 4 in 10 are conducting some other doable steps to handle inflation dangers.
- 35% are evaluating the credit score danger of main prospects.
- 32% are evaluating working capital practices.
- 32% are evaluating pricing.
- 31% are hedging towards rising prices of sure commodities and currencies.
- Simply 22% are evaluating salaries.
Extra findings from the 2022 U.S. Financial institution CFO Survey embody:
- Evaluating M&A, divestiture and partnership alternatives dropped from 26% in 2021 to 21% this 12 months.
- Assist and/or furthering ESG targets dropped from 30% to 22%.