— 58% of CFOs show optimism in the U.S. economy — 63% are
confident in their organization’s ability to meet increased demand
— 75% expect net profit to grow over the next 12 months — 94% are
using or are exploring potential uses for AI — 64% note IT/digital
transformation as a top area for expense increases
A new survey from Grant Thornton, one of America’s largest
brands for audit, assurance, tax, and advisory services, revealed
that chief financial officers (CFOs) are optimistic about the U.S.
economy. In fact, at 58%, this is the highest level of optimism
since the third quarter of 2021.
Grant Thornton’s Q2 2024 CFO survey of more than 225 senior
financial leaders revealed several other positive indicators.
The data showed that 63% of respondents are confident in their
organization’s ability to meet increased demand — a record high in
the history of the CFO survey. Respondents are also feeling
confident about meeting supply chain needs (62%), growth
projections (56%), cost control goals (55%) and labor needs
(55%).
Additionally, 75% of CFOs expect their net profit to grow over
the next 12 months, while 69% expect their revenue to increase — a
positive sign, since over two-thirds (67%) expect their expenses to
increase.
Still, CFOs believe the cost of capital remains high, as 57% of
respondents said cost optimization remains their top area of focus
this quarter.
“Although most finance leaders are confident in their ability to
control costs, it’s going to require significant focus,” said Paul
Melville, national managing principal of CFO Advisory for Grant
Thornton Advisors LLC. “The business environment is ripe for
growth, but CFOs must manage costs to capitalize on it.”
Continuing to prioritize AI and technology
In Q2, the portion of respondents who either are using
generative artificial intelligence (AI) or are exploring potential
uses rose to an all-time high of 94%. Additionally, deployment of
generative AI to assist with numerous tasks — especially
cybersecurity and risk management — grew substantially compared to
Q1.
As CFOs work to take advantage of these emerging capabilities
and mitigate their associated risks, it’s no surprise that they
rate technology upgrades (39%) as their biggest challenge, followed
by cybersecurity (37%).
Aligned with these challenges, the Q2 survey’s top two areas for
expense increases for the next 12 months are IT/digital
transformation (64%) and cyber risk/security (62%). In the history
of the survey, these two percentages have never been higher.
“Cybersecurity is an area that every company has to continually
address,” said Mike Notarangelo, partner and Private Equity Audit
& Assurance leader at Grant Thornton LLP and a principal at
Grant Thornton Advisors LLC. “There’s a sharpened focus on it in
the public markets given the recent SEC cybersecurity rules and
some notable breaches in the past few years.”
Managing cost cuts
Inflation and the need for digitalization are among the most
significant burdens that CFOs are facing as they attempt to keep
costs under control.
According to the Q2 survey results, over one-third of finance
leaders (37%) identified materials costs as an area for potential
cuts — perhaps showing optimism that inflation may finally subside
in the coming months.
“The surface looks calm,” Melville said, “but underneath,
finance leaders are paddling like crazy to control all their costs,
mitigating against liquidity challenges and materials costs while
making parallel investments in AI and cybersecurity, all of which
will pay off.”
Finance leaders also cited human capital expenses related to
employee headcount and compensation levels as the top area for
potential cost cuts. Meanwhile, 47% of CFOs identified workforce
rationalization as a top-three area of focus for the next six month
– an increase of 14 percentage points over the previous
quarter.
“Across the board, general and administrative costs are under a
microscope,” Notarangelo said. “Accounting and finance teams are
focused on maintaining appropriate levels of talent while using
technology to optimize processes. We’re focused on delivering
insights to our clients using the data we gather during the audit
that identify opportunities for operational improvements, cost
reduction and value creation.”
Hiring challenges amongst budget constraints
After the post-pandemic talent shortages of the past few years,
CFOs understand the importance of maintaining staffing levels that
will enable them to deliver on their strategic goals. Fifty-eight
percent of finance leaders said attracting and retaining key talent
is a human capital priority for the next 12 months.
However, finance leaders also said their top challenge for
bringing in talent is budget limitations. When the talent pool is
limited, it often takes a bigger financial commitment to recruit
the right people.
“When it comes to human capital costs, CFOs seem to be saying,
‘I haven’t got the budget to spend that much as costs rise
elsewhere’,” Melville said.
On the other hand, CFOs seem overwhelmingly satisfied with the
performance of their human resource functions. Ninety-one percent
of finance leaders said their organization has a solid talent
strategy in place to deliver on business goals, and 89% said their
technology platforms allow employees to maximize their output and
efficiency.
“People are trying to do more with less,” said Jim Wittmer, the
managing principal of Grant Thornton’s Atlantic Coast region.
“There’s a willingness to spend on technology because it can lead
to greater efficiency down the line, but there’s definitely a cost
rationalization element in the market right now.”
To see additional findings from Grant Thornton’s Q2 2024 CFO
survey, visit:
https://www.grantthornton.com/insights/survey-reports/cfo-survey/2024/cfos-juggle-costs-they-maintain-confidence.
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