CFO Signals™ is a quarterly survey published by Deloitte that tracks the thinking and actions of chief financial officers (CFOs) representing many of North America’s largest and most influential companies. CFO Signals™ has just released their fourth quarter report for 2014 after surveying 102 CFOs in November, 72 percent of which were from public companies, and 82 percent of which were from companies with more than $1 billion in annual revenue. The findings reveal that, despite global concerns, many CFO’s believe the U.S. economy “is finally on a strong, self-sustaining growth path.”
We present a few of the highlights of the survey below:
Sixty-three percent of CFOs described conditions in North America as good (up from 44 percent in the third quarter of 2014), and the same percentage are expecting better conditions by late 2015.
CFO’s revenue growth expectations over the next 12 months dipped from a three-year high in the third quarter of 6.8 percent to 6 percent in the fourth quarter, but that is still a comparatively strong number. Earnings expectations over the next 12 months are at a 9.7 percent, certainly a solid number albeit slightly down from 10.9 percent in the third quarter.
When asked about the most important thing they’ve done to help their company manage uncertainty, the responses from CFO’s were varied but generally revolved around the following three themes: ensuring business performance, managing operating risk, and managing balance sheet risk.
One-third of respondents expressed “very strong” optimism about the financial prospects of their company, while nearly half (49%) expressed rising optimism. Only 16% expressed declining optimism. The lowest levels of optimism are found in the Manufacturing, Energy/Resources, and Services industry.
CFO’s corporate focus is on revenue growth to drive earnings improvement, not cost cutting or expense reductions. From DataServ’s perspective, we would certainly echo these results, as many of our new clients in 2014 were undertaking accounts payable automation not because they wanted to reduce staff, but because they were expecting revenue growth and wanted to scale more efficiently. Below is an illustration from CFO Signals™ that summarizes results of their fourth quarter survey in relation to the one they conducted in the third quarter.
It’s clear from these findings that the majority of CFO’s feel that even if the U.S. economy isn’t surging, the arrow is most definitely pointing up for 2015 and beyond. Hopefully we will see these positive forecasts turn into reality this year.
So, what do you think? Do you agree with such optimism?