Evening Brief – 02.05.24
CFOs Want Stability in 2024
Amid ongoing economic uncertainties caused by interest rates, inflation, geopolitics, and the upcoming presidential election, many CFOs have more moderate expectations for 2024 than the previous year, according to a new CFO study.
Currently, 32% foresee flat or reduced revenues, and 34% estimate the same for profitability. In 2023, only 18% of CFOs forecast flat or declining revenues, while 25% expected the same for profitability, according to accounting and advisory firm BDO USA in its 2024 CFO Outlook Survey.
The survey also revealed that 66% of CFOs believe economic volatility poses the same or higher risk now as it did a year ago, while 36% intend to boost compensation for their staff and 29% intend to improve non-monetary perks in 2024.
Just over half (53%) of CFOs report that they have integrated ESG concepts into their main business plan or are actively working on it. Almost half of firms have or are establishing a generative artificial intelligence (AI) policy.
Despite the uncertainty, CFOs are identifying opportunities to build stability and resilience in their firms and strategies to stimulate growth. New tools, such as AI, and new approaches to business concerns, such as worker engagement, create intriguing opportunities that will shape the middle market’s priorities this year, BDO noted.
“In this economic environment, thriving companies are being even more intentional about their approach to financial stability and long-term growth,” said Wayne Berson, CEO of BDO USA. “Those looking to prosper as the market rebounds must take bold action now to gain market share, carve out a competitive advantage, and position their organization for sustainable growth.”
The healthcare industry continues to suffer a difficult economic environment, but CFOs see remain optimistic, with 78% forecasting profit growth in 2024.
Meanwhile, life sciences CFOs face a cash-strapped environment as investor scrutiny rises and M&A activity slows. The more austere economic landscape implies that many life sciences CFOs are searching for methods to recoup expenses, with 42% stating that they intend to seek tax credits as a cost-cutting measure. Despite difficult funding conditions, these CFOs continue to prioritize fundamentals, with 77% intending to increase spending on R&D.
The survey comprised 600 middle-market CFOs with revenues ranging from under $250 million to over $3 billion and was conducted by Rabin Roberts Research, an independent marketing research firm, in October 2023.