CFO Survey Deloitte: The Way the CFO Sees the Future
Deloitte pays careful attention to the expectations of Dutch CFOs in its biannual CFO Survey. The CFOs questioned appeared gloomy about the prospects for the coming months. A shortage of qualified professionals, uncertainty about the current economic climate and the geopolitical situation are seen as the main risks currently facing companies. Sales expectations, however, remain positive (61 per cent of CFOs expect higher sales in the next 12 months). Unfortunately, this will not always translate into growing profits: Cost increases and skilled labor shortages present CFOs with many challenges.
Around 90 percent of CFOs indicate that, although they will pass on most of the cost increase to consumers where possible, this cannot compensate for the entire cost increase. Many logistics chains have been disrupted during the corona crisis. Those problems have not all been resolved and the war in Ukraine also continues to cause further supply chain disruptions and scarcity of all kinds of raw materials and goods. Energy prices are not helping either. In short, all hands are going to be needed on deck for the coming period.
Cushioning the shocks
To be able to face these challenges the demand for talented financial professionals remains high. This can mean significant wage increases to attract and keep these professionals. Some new blood is also needed to ensure that innovation and sustainability are on the agenda also for the long term. CFOs clearly signify that they would continue with initiatives concerning these issues; they cannot desist from moving forwards.
In reaction to the abovementioned developments, many CFOs are paying extra attention to their liquidity. Understandably and justly so. In times of uncertainty, cushioning the shocks remains a high priority, especially given interest rate developments within the financial markets. But good liquidity management is not everything. CFOs and their organizations will continue to look for growth, but this is more likely to happen organically. The appetite for acquisitions and venturing into new markets is lower and will result in these issues featuring lower on the agenda in the coming months.
Look beyond the curve
In spite of everything, Dutch CFOs seem to be more positive about the future than their European peers. They expect inflation to ease in 2023 and reach around 4 percent in 2024. As mentioned, this phase will also present opportunities. CFOs say they are accelerating their efforts with regard to the energy transition, by using energy more efficiently or switching to alternatives. Loss-making products are also phased out more quickly. Scope for investment is shrinking and companies are forced to prioritize their strategic choices. In the coming months CFOs will have to decide whether to step on the accelerator or apply the brakes as it does not seem as though prices will revert to their previous levels in the foreseeable future.
This essay was published in Management Scope 09 2022.