U.S. Bank’s CFO Insights Report Shows Finance Leaders Have Shifted to Defense Mode

U.S. corporate finance leaders have firmly pivoted their focus from revenue growth to cost control as they navigate through an uncertain economic environment and rapidly changing business landscape, according to U.S. Bank’s 2023 CFO Insights Report.

The survey of more than 1,400 senior finance professionals in the U.S. revealed that the top two priorities for finance leaders are cost controls within the finance function – up from the eighth highest priority in 2021 – and cost controls across the entire business, a shift from 2022. Meanwhile, driving revenue growth has been deprioritized compared to 2021 when it was a top priority for finance leaders.

“CFOs have positioned themselves decisively in defense mode. With the end of the low-cost capital era and inflation still uncomfortably high in some parts of the economy, finance leaders are taking control by driving efficiencies in their organizations,” Stephen Philipson, head of global markets and specialized finance at U.S. Bank, said. “As we work with CFO clients on how to position their balance sheets for a potentially more challenging economic environment, the focus is on prudent capital-allocation decisions. We talk about how to weigh cost-control efforts against focused investments that could drive future growth. As our survey results show, this balance is challenging CFOs.”

Key Survey Findings

Top risks

  • Rising interest rates, while still not a top risk, jumped from the least concerning risk last year to middle of the pack this year (23%). Similarly, regulatory changes (25%) moved up in the risk rankings this year.
  • Finance leaders ranked talent shortage (43%), pace of technology change/digital disruption (40%) and high inflation (38%) as the top risks facing their businesses. California finance leaders said high inflation is their top business risk, which was much higher than finance leaders across the rest of the country.
  • Only 33% of finance leaders are more than somewhat confident in their company’s ability to manage inflation risks, and only 6% are highly confident.

Cuts vs. growth

  • Cost cutting and driving efficiencies within the finance function is the top priority (38%), compared with 30% in 2022 and a mere 23% in 2021. Cost cutting and driving efficiencies across the business is the second highest priority (33%).
  • Driving revenue growth was the fifth-highest priority (23%), up slightly from 2022 but down from the second-highest priority (35%) in 2021.
  • 56% of finance leaders currently struggle to balance cost cutting and building resiliency with investment in future growth, up from 46% in 2021.

Areas for efficiencies

  • Despite the increasing need to control costs, CFOs are not turning to layoffs, as the competition for talent remains tight. Only 19% plan to reduce headcount, compared with 40% in 2021.
  • Instead, CFOs ranked investing in technology in order to cut costs first, followed by restructuring their workforce and outsourcing business functions and processes. Data analytics (53%), artificial intelligence (52%) and cloud computing (48%) are the top priorities for technology investments.
  • Within the healthcare sector, about six in 10 believe AI could completely redefine how the finance function is operated. In other sectors, only about half of finance leaders suggested a similar sentiment.

Increased appetite for digital payments

  • 68% of respondents intend to use instant payments (RTP Network, FedNow Service) two years from now. The survey found that 42% currently use real-time payments, up from 38% in 2022.
  • Respondents from consumer and retail (56%) and hospitality and leisure (54%) were more likely to say they used instant payments today than industries such as oil and gas (34%) and aerospace and defense (30%).
  • Improved working capital (46%) resulting from faster payments processing and improved customer and supplier experiences (43%) are the two primary drivers for adoption of instant payments.

The results of this research are based on a survey conducted by FT Longitude on behalf of U.S. Bank. The 1,420 senior finance leaders surveyed work at U.S. businesses across multiple sectors. Half of the survey participants are group, regional or divisional CFOs. The remainder are senior managers within the finance function. Every surveyed finance leader works for a business that generates at least $100 million in annual revenue, with 39% working for a business that generates more than $1 billion.

Like this story? Begin each business day with news you need to know! Click here to register now for our FREE Daily E-News Broadcast and start YOUR day informed!

Leave a comment

View Latest Digital Edition

Terry Mulreany
Subscriptions: 800 708 9373 x130
[email protected]
Susie Angelucci
Advertising: 484.459.3016
[email protected]

View Latest Digital Edition

Visit our sister website for news, information, exclusive articles,
deal tables and more on the asset-based lending, factoring,
and restructuring industries.