Financial executives must make decisions that will prove to be pivotal over the next several quarters. But with much at stake, they appear to be confident in their ability to achieve their goals, regardless of what happens to the U.S. economy.
In CFO’s most recent outlook survey, 51% of finance leaders surveyed said they are confident in the economy, and a majority of CFOs (92%) said they are prepared for a recession this year, should one occur.
Prepared for Recession, Inflation Impact
CFOs and their teams have invested in strategizing how to identify and overcome potential recession-induced issues. With 100% of CFOs saying they believe inflation will be an issue in 2023, more than three-quarters (78%) told surveyors they will look to cut costs or cut products to fight it.
When asked about their top three tools against inflation, answers varied. While widespread and targeted cuts ranked second and fourth in top strategies against inflation for CFOs respectively, it was cash flow optimization that proves to be paramount for CFOs looking to ready themselves for a potential recession.
While CFOs are preparing for the negative consequences of inflation, their executive peers seem to be taking a more positive approach to the consequences of rising inflation. A majority of non-finance executives (56%) told surveyors they believe inflation will positively impact revenue this year.
With the ongoing competition surrounding labor, CFOs are realistic about the potential cuts they will have to make to their labor force, should a recession occur. Over a third (39%) of CFOs said they would cut budgets around hiring due to a potential recession, while another 37% said they would cut expenses intended to retain talent should the overall economy dictate it.
Controlling the Controllable
The Fed continues to push towards a targeted 2% inflation, congress faces another debt ceiling debacle, and international markets remain tumultuous for a variety of reasons. There is much going on in the world that can impact any company, regardless of industry, that is outside of the control of their executive team.
With more than a third (34%) of leaders saying they will increase technology adoption for their workforce in 2023, increased wages or salaries and flexibility in work environments were also top choices. Business leaders, regardless of economic outlooks, are focusing on where they can implement change in order to put their company in the best position to recruit and retain the best talent.
Proactive CFOs are focusing on implementing positive changes to give themselves the ability to invest in talent retainment and recruitment, one of the most coveted hurdles financial executives expect to have to overcome in 2023. These changes, directly at the direction of executive teams, are expected to pay major dividends in the ongoing competition for talent.
Despite its Issues, Reliance on Tech is Prevalent
Despite issues with shelfware and less-than-desirable sales processes for SaaS products, CFOs and their teams are still focused on upskilling themselves around technology, its usage, and gauging its value. Nearly three-quarters (73%) of CFOs project an increase in IT and technology spending this year, while only 36% of financial executives said they were likely to cut digital business initiatives in the case of a recession.
Compared to their executive counterparts, CFOs were significantly less willing to make cuts in this area. Nearly half (45%) of non-finance executives told CFO surveyors they would be willing to cut digital business initiatives in order to counter a recession.
Despite the possibility of future cuts, the interest of CFOs in technology hasn't gone unnoticed. When managers were asked if their CFO "champions" technology use throughout the business, 89% said their CFO fits that description.