Global CFO survey highlights strategies to rebuild revenue streamsCreating new or enhanced products and services and maintaining R&D and digital investments are top priorities.
As companies reopen workplaces, global CFOs say in a recent PwC survey that their biggest concern remains the effects of a global economic downturn on their businesses, followed by fears of a second wave of infections. CFOs' focus has also shifted from crisis response to rebuilding revenue streams.
The fifth of PwC's recurring COVID-19 CFO Pulse surveys, the latest study found finance leaders' top three concerns to be the impacts of a global economic fallout, with 60% of CFOs citing this as a cause for worry; a new wave of COVID-19 infections (58%); and financial impact on areas such as liquidity and capital resources (47%).
The report, which surveyed 989 CFOs in 23 countries or territories between 1 June and 8 June, noted a shift in CFOs' focus from managing workforce productivity losses in earlier months of the pandemic to ways to move forward and thrive. With operations stabilising, a top priority now is to rebuild revenue streams.
Melanie Butler, a partner at PwC UK, said in a release that companies "have a key role to play in learning to operate alongside a virus that remains a threat", adding that agile plans are needed to manage a global economic slowdown, re-engage customers, and innovate to open new revenue streams.
The most commonly used strategy by CFOs to rebuild revenue streams is making changes to products and services by offering new, enhanced, repurposed, or pared-down versions. Other ways to regain lost revenue include:
- Pricing strategies: increasing or decreasing price of products and services, offering different payment terms;
- Distribution channels: shifting in-person sales and delivery to online platforms;
- Customer segments: selling directly to customers, targeting new industries, pivoting from business to consumer (B2C) to business to business (B2B) segment;
- Supply chain strategies: developing alternate sourcing options, changing contractual terms;
- Geographic markets: entering new markets, leaving existing markets;
- Talent: hiring new talent, upskilling current employees; and
- Mergers, acquisitions, joint ventures, or alliances.
R&D and digital investments still in play
CFOs report that the most common cost cuts are in facilities and general capex with 82% of CFOs surveyed considering reduced spending in those categories, followed by operations (47%), workforce (40%), and IT (31%).
Although slashing costs remains a priority to sustain a healthy cash flow, only 14% and 11% of CFOs say they will consider cancelling or deferring investments on research and development (R&D) and on digital transformation, respectively.
CFOs' sustained investment in R&D and digital transformation is consistent with their other responses that highlighted plans to accelerate automation and improve remote work experience, according to the report.
Making remote working permanent
Of CFOs surveyed, 52% said their companies are considering making remote work for some roles a permanent arrangement.
The finance chiefs reported that their companies developed greater flexibility during the crisis and the capability will make their organisations more resilient. In line with that, more than half say they are planning to focus on improving remote working experiences.
Looking ahead, CFOs are considering tools, behaviours, and incentives that will enable employees to be productive, collaborative, and creative while working remotely.
— Alexis SeeTho (Alexis.SeeTho@aicpa-cima.com) is an FM magazine associate editor.