Many chief financial officers globally are optimistic about the future, looking forward with anticipation instead of anxiety, confident their businesses will grow both organically and internationally, according the latest survey report by Deloitte.
Deloitte's Q1 2013 report surveyed CFOs from 16 countries, finding decreased worries about Europe's currency crisis and possible slowdowns in China and the US. The Big Four firm concludes CFOs are abandoning their 'wait and see' approach, finally having the confidence to pursue expansionary tactics.
Deloitte global CFO programme leader Sanford Cockrell III said: "CFOs tend to be cautious by nature, so the fact that this report indicates a more uniform uptick in forward thinking is pretty significant.
"It doesn't appear any longer to be a matter of if, but when and how, they will take action. But recent history dictates that any organic growth or M&A efforts will be done strategically and with great diligence."
The survey revealed a mixed recovery approach by region, with four themes emerging: growth, corporate debt, policy and regulatory implications, and strategy development.
Growth and the M&A market
CFOs are looking for growth opportunities and evaluating their next move. While many are looking internationally, the views vary by geography:
- In Ireland, 69% of CFOs consider their corporate strategy to be expansionary rather than defensive;
- In the Netherlands, while three-quarters of CFOs still strive for organic growth, 71% expect M&A levels to increase in the next 12 months;
- In France, growth in emerging countries is a main driver of optimism for 40% of CFOs;
- In Austria, the percentage of CFOs thinking M&A will play a positive role in the next few months rose from 18% to 21%.
Policy and regulatory implications
- In North America more than 90% of CFOs say current and recent policy decisions and debates are impacting plans and 40% of those CFOs indicate an increase in their government advocacy and lobbying efforts as a result;
- In China, regulatory hurdles are seen as one of the key challenges for doing business in that country, both in terms of volume of regulation and uncertainty in interpretation.
Strategies
With greater optimism moving forward, CFOs are resuming their strategy roles:
- In China, 65% of CFOs report that their CEOs are asking them to focus on strategy setting, development, and execution as one of their top three priorities;
- In Australia, more than half of the CFOs surveyed consider strategic planning as the top capability they'd like to improve within their finance team;
- CFOs in North America are being recognised by their CEOs for the following: providing objectivity, providing a point of view, providing analytic rigor and challenging assumptions.
While the report found a sense of relief driving optimism, it wasn't all good news. CFOs' perceptions of macroeconomic and financial uncertainty in the UK may have dropped to a two-and-a half-year low, but in Belgium, a quarter of CFOs don't expect growth there before 2015. Also, CFO sentiment in North America has improved, with earnings expectations up for the US, but, in contrast, more than half of China's CFOs expressed doubt about a recovery in the US and Europe.