According to the 2023 U.S. Bank CFO Insights Report, U.S. corporate finance chiefs have decisively shifted their attention from revenue development to cost containment as they navigate through an uncertain economic environment and a quickly evolving business landscape.
Cost controls within the finance department, up from the eighth greatest priority in 2021, and cost controls across the entire organisation, a change from 2022, were found to be the top two objectives in the survey of more than 1,400 senior finance professionals nationwide. Driving revenue growth is now a lower priority than it was in 2021 when finance chiefs gave it top priority.
The CFOs have taken a definite defensive stance. According to Stephen Philipson, head of Global Markets and Specialised financial at U.S. Bank, “financial chiefs are taking control by pursuing efficiencies in their organisations as the low-cost capital era is coming to an end and inflation remains uncomfortably high in some sectors of the economy.
The emphasis is on wise capital-allocation decisions as we consult with CFO customers on how to prepare their balance sheets for a potentially more difficult economic climate. We discuss how to balance cost-cutting measures with targeted investments that could stimulate future growth. This balance is difficult for CFOs, as our survey results demonstrate,” Philipson continued.
Even while they are still not a top danger, rising interest rates have moved from being the least alarming risk last year to the middle of the pack this year (23%). Similar to this, regulatory changes (25%) climbed up this year’s risk rankings.
The main dangers to their firms, according to finance leaders, are a skills shortage (43%), the speed of technological change and digital disruption (40%) and high inflation (38%) rates. Finance executives from California ranked rising inflation far higher than finance executives from the rest of the nation as their top business risk.
Only 6% of finance leaders are extremely confidence in their organization’s capacity to manage inflation risks, compared to only 33% who are more than slightly confident.
Cost reduction and driving efficiency inside the finance function are the top priorities right now (38%), up from just 23% in 2021 and 30% in 2022. Cost reduction and driving efficiency across the entire company are the second highest priorities (33%).
Driving revenue growth was the fifth-highest priority (23%) and was down from the second-highest priority (35%) in 2021, but it was up significantly from 2022.
Up from 46% in 2021, 56% of finance leaders now report having difficulty juggling investments in future growth with efforts to reduce costs and strengthen resilience.
Due to the intense rivalry for talent, CFOs are choosing not to implement layoffs despite the growing need to decrease expenses. Only 19% of companies want to cut staff, down from 40% in 2021.
Instead, CFOs rated restructuring their staff, outsourcing corporate operations and procedures, and investing in technology to minimise expenses in that order. The top priority for technology investments are cloud computing (48%), artificial intelligence (52%) and data analytics (53%).
About six in ten people in the healthcare industry think AI will radically change how the financial function is run. It was only around half of finance leaders in other industries.
In two years, 68% of respondents said they’ll use instant payments (RTP® Network, FedNow Service). According to the survey, 42% of respondents now make real-time payments, up from 38% in 2022.
Respondents from the consumer and retail sector (56%) and the hospitality and leisure sector (54%) were more likely than those from the oil and gas sector (34%) and the aerospace and defence sector (30%) to report using immediate payments today.
The two main factors driving the use of immediate payments are better customer and supplier experiences (43%) and enhanced working capital (46%) as a result of quicker payment processing.
The study’s findings are based on a survey that FT Longitude carried out for U.S. Bank. The 1,420 senior finance leaders questioned are employed by American companies in various industries. Group, regional, or divisional CFOs make up half of the poll respondents. The remainder are senior finance function managers. Every financial executive who responded to the study works for a company that brings in at least $100 million annually, and 39% of them work for companies that bring in more than $1 billion.
U.S. Bancorp, the parent corporation of U.S. Bank National Association, had roughly 77,000 employees and $681 billion in assets as of June 30, 2023. With a diverse portfolio of businesses, including Consumer and Business Banking, Payment Services, Corporate & Commercial Banking, and Wealth Management and Investment Services, the Minneapolis-based corporation serves millions of customers locally, nationally, and internationally. In 2022, Union Bank, which had mostly West Coast retail banking locations, joined U.S. Bancorp. In addition to being named one of the 2023 World’s Most Ethical Companies and Fortune’s most admired superregional bank, U.S. Bancorp has received praise for its commitment to digital innovation, social responsibility, and customer service.