The Deloitte CFO 2018 survey is out – and the results are concerning.

The quarterly survey has become a trustworthy and reputable barometer of sentiment and outlook for UK CFOs and leadership teams as they review trends in industry and look ahead towards risk areas, profitable opportunities and attempt to charter the best path towards organisational productivity.

Three key findings have been highlighted through the survey, which includes:

  • The return of Brexit as one of the biggest risks facing businesses with growing concern about international outlook for UK organisations.
  • Financial teams and financial strategies towards the defensive as they focus on controlling cost and managing cash flow within their businesses
  • The growing concern about a widening skills gap and recruitment issues.

 

Brexit:

According to the survey, “CFO pessimism over the long-term impact of Brexit is at its highest level since we started asking the question in the summer of 2016” says the report.  Across the board, most UK CFOs expect to reduce their own spending as a result of the economical uncertainly that lies waiting for a decision with almost half of those surveyed intending to scale back their hiring plans and those who plan on reducing capital expenditure over the next three years, rising to 30%.

Perhaps slightly contradictory, despite the concerns of the long-term impact of Brexit, most UK CFOs felt an increased sense of business optimism about the financial prospects of their companies.

When it comes to M&A Activity, the survey showed that 17% of those CFOs surveyed expected a decrease in activity – a slight increase in sentiment compared to Q1 of this year – and 40% of them expecting a decrease in hiring activity within their organisations too.

 

Recruitment Challenges and Tech Disruption:

With the expected decrease in hiring activity, the rising concerns felt amongst CFOs highlights the growing skills gap concern and access to the best talent within organisations.  Coupled to the news of a ten year rising trend in the number of FTSE 100 female CFOs now falling over the last few months, CFOs are up against not only skills, but significant strategic management challenges.

Almost half of UK CFOs have felt a significant rise in recruitment challenges, and skills shortages over the past couple of months of 2018 – and their outlook for the short-term doesn’t change too much. They are being forced to do what they can, with what they have, and find innovative new ways of ensuring that their businesses retain and drive productivity forward.

Perhaps coupled to this growing concern of skills shortages, was the technological disruption being faced by many CFOs who are trying to manage this technological change while steering their strategic ships. For many CFOs surveyed,  the sentiment about rising pressure to leverage new technologies, such as cloud computing, robotic process automation and analytics tools are quickly becoming areas to address within their businesses and functions.

 

Preserving to Endure – unless you’re globally-able

The survey highlighted the fact that UK CFOs have been placing greater emphasis on defensive strategies such as increasing cash flow and reducing costs in their businesses. However, despite this preservative approach, many rate the introduction of new products and services and expanding into new markets as one of their biggest priorities after cash flow and cost reduction.

Running in parallel, operational innovation is at the top of the agenda while they look to build up resilience against the current, and looming economic uncertainty.  Although not one of the top priorities at the moment, 18% of those surveyed still viewed expanding by acquisition as a key priority within their business growth strategy.

However, this occurring defensiveness is quite different between those organisations who are facing UK-only business and those who are depending on revenues from international markets, taking a slightly less defensive approach and


We live in turbulent times. Our markets are being driven by political agenda and changing economic habit and unless we innovate, we all risk falling behind – very quickly.

So, whether you require specialist expertise within your finance function – or whether you simply need an extra set of resources to help manage you through transition, we’d love to hear from you. We can help – and deliver what you need.