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CFOs embattled by trade, tariffs and talent concerns

Global trade concerns, recruiting top talent and an analytical skills gap are dampening the optimism of North American CFOs. Deloitte's Q3 2018 CFO Signals survey found that chief financial officers in North America are less optimistic this quarter about the global economy, expressing strong concerns about geopolitical and economic events (especially relating to trade policy and interest rates). Respondents also said they are under pressure to execute on their growth plans, voicing growing internal concerns about driving initiatives and finding talent. The majority foresee increased complexity in recruiting employees with the right skills, as financial functions adopt automated processes and require more analytical skills.

The quarterly survey tracks the sentiment of CFOs from the US, Canada and Mexico, most from companies with annual revenue greater than $1 billion. For Q3 2018, 132 CFOs took part. The key points in the report were as follow:

  • CFOs were less optimistic about the health and trajectory of the North American, European and Chinese economies.
  • With US equity markets hitting new highs, 71 per cent of CFOs say equities are overvalued. But 73 per cent of CFOs say debt financing is attractive.
  • Own-company optimism declined, largely due to increased pessimism in the US and Canada.
  • Growth expectations for revenue, earnings, capex, and hiring declined; dividend expectations hit highest level in eight years.
  • In terms of key operating metrics over the next 12 months, fewer respondents this quarter expect revenue growth, while earnings growth declined from 10.3 per cent to 8.1 per cent. Capital investment slid from 10.4 per cent to 9.4 per cent. Domestic hiring fell from 3.2 per cent to 2.7 per cent. Dividend growth rose sharply from 4.8 per cent to 7.4 per cent (highest level in eight years).
  • CFOs expect finance function responsibilities to change, envisioning a technology-enabled workforce that may shift more operations to shared service centers of excellence.
  • Relative to today’s state, CFOs foresee a large increase in the gig economy, shared service centres, and offshore finance operations, along with a rising need to address evolving talent requirements.
  • The key skills organizations need to develop/further develop to support the finance function will likely be related to analytical skills, digital technologies/automation, and core business skills.

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Cash & Liquidity Management
Cash & Liquidity Management in North America

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