While leadership confidence has rarely dwindled throughout the multiple warning signs of a recession, good CFOs continue to be proactive and diligent in their goals. In a “control what you can control” mindset, leaders have continued to focus internally, rolling with the punches and doing their best to limit the effects of the external economic impacts.
Despite an approaching debt limit debacle in Washington, a hawkish and determined Fed, the increasing amount of consumer debt, and the impacts of a post-pandemic work environment have had on both private and commercial real estate, CFOs remain confident in the greater economy’s ability to correct itself.
And according to CFO’s recent 2023 Q2 Outlook survey, two-thirds of executives said they don’t believe that the U.S. economy is headed for a recession. A total of 500 business leaders in the U.S., mostly in finance roles, completed the survey between March 17 to March 30, 2023.
The symptoms of an economic slowdown, such as high inflation, have some short-term benefits, according to data. Nearly three-quarters (73%) of CFOs expect inflation to have a positive effect on the constant currency on revenues for this quarter. Less than a fifth (16%) said that inflation will have any type of negative impact on revenue.
A majority of respondents still believe that economic expansion is possible in 2023. Among all executives, more than half (53%) said they expect some sort of economic expansion, versus any type of recession. Just over a third (35%) said they expected any type of slowdown at all.
Nearly two-thirds (65%) of finance chiefs expect revenue increases between 1%-10% this year. And 19% of CFOs expect much more payoff, expecting revenue to increase between 11-20% by the end of the year. Increased revenue and cash flow will likely provide some peace of mind for CFOs if the economy takes a sudden turn for the worse.
As investor and venture capital funding continue to become more difficult to obtain, CFOs and their teams must hone their confidence in strategically-driven results. While confidence is good and is needed for a leader to have both morale and productivity high, CFOs must remain realistic in their goals, and plan for the strong possibility of external economic conditions having a legitimate impact on some element of their business in the near future.
Many CFOs are assessing where and how they can cut costs. Increasing efficiency (36%), implementing hiring changes (34%), and increasing reliance on automation (28%) were the top three plans to reduce allocations.
While the top choices included more changes to workflows and the way work is completed, others chose outsourcing roles (23%) and layoffs (21%) as ways to eliminate costs.
Amid the question of whether or not to maintain office spaces, managers are still embracing hybrid work strategies. While 45% are hybrid and 22% fully in-person due to their business requirements, some have used hybrid work as a way to increase morale and autonomy among their staff. Nearly a quarter (22%) of managers implement a hybrid strategy based on employee preference.
CFO confidence and ambition have spilled over into M&A outlook. According to the survey, 65% of finance chiefs at least consider themselves as buyers in the M&A market, with over a fifth (21%) of them saying they will indeed acquire another company. Less than a third (29%) of CFOs said they plan on being acquired by someone else.