Bullish & Building Back – CFOs Say It’s Time To Spend.

Any CFO will tell you – Revenue is good; Profit is better.

Following on from our recent posts on looking forward and making a successful 2021, we explore what the market is saying and how we can start building back the wider economy. 

With recent predictions from the W.H.O it is clear that, even with vaccines, there is no quick comeback to life as we knew it, so business, and the world, need to adapt to how we deal with further restrictions. This year we need to move away from crisis management and create a “new normal” focused on growth.

This plays a big part in the outlook of many business leaders we have spoken to and particularly the CFOs – who back in April 2020, were the quickest to tighten the purse strings and conserve cash reserves. Now it seems that they are at the forefront of the executive team in the drive to push forward with a bullish approach to 2021. 

Now while you may think that, of course, being in recruitment

we would be telling you that everything is getting back to normal…

This is backed up by a recent survey by Oracle Netscape who surveyed companies with up to $500 million in revenue. And there was an overwhelming view from CFOs that “they see spending priorities in 2021 heading back toward where they were at the outset of 2020 and are calling for increases almost on par with December 2019. “

So, why is this important?

First, let’s be honest, a lot of market confidence comes not only from actual performance but from market perception, so the change in rhetoric from the part of the executive team typically known for reining in spending and a cautious approach should not be underestimated. Positivity breeds positivity.

Secondly, their look to start increasing spending this year to almost pre-pandemic levels shows, not only a move from crisis management and a willingness to get back to business, but importantly that the financial forecasting shows opportunity and need for growth. 

Delving deeper into the Oracle report we start to understand where their concerns lie – as they did in December 2019 – the skills gap. While the available labour pool has grown substantially since then, those gaps still exist and new ones have emerged.

“The trends around technology and its use in opening new sales channels, as one example, have likely made the talent shortfall worse, so spending on people and tech is a reasonable reaction.”

CFOs see the spending emphasis needing to be focused on both the skills gap and technology (almost certainly due to the role technology has played in developing a successful work from home environment), but what is more promising to the wider return of business growth is that spending on marketing, sales, production, and product support is now also recovering compared to the start of the pandemic – the real signs of growth. 

This all rings true with last week’s article – Leading The Way 2021. If you haven’t read it, take a look. Though looking specifically at the tech sector, a lot of what is written in the article relates to business as a whole.

Final take away…

2020 was the year where businesses had to take a good hard look in the mirror and get lean, this year needs to be the year of investment and growth. 

Whether it’s some combination of understanding the intricacies of the financial forecasting, closer conversations with other finance specialists in the market, or something else, CFOs are leading the way back and we should be listening to them.