The core priorities for North American CFOs

Supporting strategy is the No. 1 business focus for North American CFOs in the next year, according to Deloitte’s quarterly CFO Signals survey.

In addition to business priorities, respondents were asked their top finance priorities – the “operator” and “steward” roles, according to the report. For the next year, the top five are:

• Managing financial planning and analysis (FP&A);
• Managing liquidity;
• Managing finance strategy;
• Managing finance talent; and
• Managing IT.

Those priorities were measured by how many CFOs included them in their top three choices. Managing FP&A was slightly ahead of the other three, with 50% of CFOs ranking it first, second or third. Managing liquidity, finance strategy and finance talent were in the second tier, with about 40%; and managing IT was a top priority for one-third of CFOs.

Nearly 85% of respondents named supporting strategy as a top business priority. Supporting sales was second at 46%.

CFOs’ top personal priorities were spread across a variety of topics, with retention of key finance talent and raising personal influence or authority at the top of the list, at just above 40%.

Completing a key initiative was next at 33%, followed closely by building exposure or experience outside their company, a finding consistent with other surveys showing that CFOs want to take on more external board roles. Additionally, CFOs are increasingly in demand for board positions, according to a global Ernst & Young survey from fall 2012.

CFOs say they make their strongest contributions in four main areas, according to the Deloitte survey: analytical rigour, opinion/point of view, objectivity and challenging assumptions. About half of CFOs place each of those qualities in their top three.

Growing optimism

North American CFOs’ optimism about their companies increased sharply in the CFO Signals report. Net optimism (the difference between those reporting rising optimism and those reporting rising pessimism) rebounded from minus-11 in the fourth quarter of 2012 to plus-32 in the first quarter of 2013, following a trend that played out in 2011 and 2012.

However, the overall optimism in early 2013 is far below the plus-48 measure from a year ago.

About 40% of respondents were pessimistic in the fourth quarter of 2012, compared with less than 20% who were pessimistic this quarter. The S&P 500 has hit a record high since the last survey, which used responses of 106 CFOs from North America, the majority of whom (85%) work for companies with more than $1 billion in annual revenue.

Although projections for earnings and capital spending rose, companies aren’t forecasting higher sales or growth in domestic employment. While more than 60% of CFOs cite the status of North American economies as a driver of growth, about one-fourth say it’s a top impediment. About twice as many CFOs say Europe’s economy is a top impediment to growth (25%) compared with those who say it can spur growth (12%). The status of China’s economy is a top growth aid for 23% of CFOs.

As CFOs begin to accept most gains will be small, they are trying to move forward, Deloitte says. “Cash-rich and lean, many (companies) are getting even more aggressive about finding and exploiting pockets of growth, spurring both organic and M&A expansion,” the report says.

Related CGMA Magazine content:

“US Economic Optimism Still Neutral, but Rising”: US economic optimism is on the rise, but that rise brought it only into the neutral category, according to the latest AICPA Business & Industry Economic Outlook Survey. CPA decision-makers felt good about their businesses’ potential for growth, as each component of a nine-factor index rose compared with the previous quarter.

“CFOs’ Optimism on the Rise”: CFOs in the United States had greater expectations for economic growth in the next 12 months compared with the sentiment of counterparts in Italy and France. A quarterly survey showed that US CFOs projected higher net earnings and revenue. Their companies also were more likely to add staff in the next year.

—Neil Amato (namato@aicpa.org) is a CGMA Magazine senior editor.