The new installment of a biweekly survey from Big 4 firm PwC gathered the input of 330 finance leaders ending the week of June 8, just as most states were more fully reopening their economies, several potential flare-ups of new COVID-19 cases were threatening to emerge and the U.S. economy officially entered a largely expected period of recession. Against this backdrop, CFOs expressed optimism about being able to start rebuilding revenues, even while acknowledging long-term concerns about what the “new normal” is going to look like.
Worries about a new wave of COVID-19 infections top the list of threats to business recoveries and the financial impacts of the pandemic. Liquidity and capital resources were prominent on that list, but only 42% of CFOs said it was a top concern in this survey, versus 75% in April.
Getting Back on Track
Nearly half (47%) of respondents expect revenue declines of more than 10% this year, but only 13% of CFOs are now looking at declines of more than 25% – a drop from 20% expecting such steep declines five weeks ago. And 11% are now starting to see prospects for revenue and/or profit growth in 2020 as the economy reopens.
Survey respondents noted multiple potential paths to grow their top-line revenues, with 63% of CFOs planning changes to products and services and 41% looking to alter pricing, among other revenue strategies. Meanwhile, as they look to reinvent their businesses, nearly one-third of CFOs (32%) will be focusing on tech-driven products and services.
Returning to the Office Amid a Second Wave?
With a potential resurgence of the outbreak looming, 59% of CFOs worry about a rise in COVID-19 infections affecting returns to work. Nevertheless, most are very confident their company can both provide a safe working environment (71%) and meet customers’ safety expectations (80%). Of course, their staff may have a different view of the situation back at the office, considering that only 47% of employees in a separate PwC workforce pulse survey said changing workplace safety measures – such a face masks, temperature checks and socially distanced work areas – will make them more comfortable returning to the office.
Given this lack of consensus – and considering the relative productivity of remote working for many companies over the past few months – 54% of CFOs are planning to make remote work a permanent option. Meanwhile, fewer leaders anticipate more furloughs (30%, down 6% from the previous survey) or layoffs (24%, down 7% from the previous survey) in the next month, a trend consistent with the slowing number of people filing for unemployment.
Updated May 11, 2020: CFOs Forecast Lasting Changes in Latest PwC Survey
The latest CFO survey from Big 4 firm PwC largely reflects the developing general consensus as to how the country will eventually emerge from the COVID-19 pandemic – slowly, cautiously and with eye toward structural and behavioral changes that may very well turn out to be permanent.
The new installment of PwC’s biweekly survey canvassed 288 finance leaders during the period of May 4-6, when an increasing number of states were loosening stay-at-home orders, cases were still on the rise in many areas and unemployment continued its steady upward trajectory. More CFOs agree that the path going forward is going to be a long one. For the first time, more than half expect their company to take at least three months to recover once the virus recedes.
That said, as they approach some new version of normal, two-thirds of respondents are “very confident” their company can create a safe workplace (even if employees aren’t as sure), 68% believe that crisis-driven transitions to remote work will make their company better in the long run and fewer are considering pushing back or canceling planned investments (58%, down from 70% two weeks ago).
Companies seem to be getting a better handle on conducting business in a transformed environment, with concerns over productivity losses due to remote working conditions declining. In fact, 44% of respondents say they’re finding new ways to serve customers, with many noting that social technologies routinely used in our private lives are now being absorbed into operational planning in the workplace. Despite these silver linings, however, 55% still expect their company to suffer a decline of 10% or greater in revenue and/or profits for this year, a slight uptick from two weeks ago.
Even as costs remain under scrutiny for almost every company, many CFOs believe they’ve done what they can and will wait to see how things develop before making additional cuts. In addition to the aforementioned optimism toward pullback on planned investments, fewer respondents anticipate furloughs over the next month – 36% in the current survey versus 44% two weeks ago. Further, 34% say they are “very confident” their companies are identifying new revenue opportunities – a number PwC believes will increase as demand becomes clearer.
As they ponder what a return to the office may look like, CFOs are getting more concrete about how their companies will prepare, as evidenced by rising numbers since the last survey in three of the top areas of expected change – reconfiguring work sites to promote physical distancing, changing workplace safety measures/requirements and changing shifts or alternating crews to reduce exposure. Even so, a separate PwC survey of 468 employees found that 51% who have been forced to stop working or forced to work remotely say the fear of getting sick would prevent them from returning to the workplace if their employer requested it tomorrow. In other words, no matter what protective measures companies put in place, they’ll likely still have to sell the idea of a return to the office to a worried and skeptical workforce.
“The shutdowns showed many companies that they can work virtually better than they thought,” the study concludes. “These leaders are seeing the results of being able to move quickly and decisively during a crisis, even while away from the office, and they’re making connections to the longer-term health of their companies. Ultimately, however, the longevity and success of remote work will be driven by the opportunities businesses create for employees to interact, learn and be part of a community. For some organizations, culture also drives innovation and can deliver higher returns, outweighing the costs of on-site work.”
Updated April 28, 2020: CFOs Weigh the Risks of Reopening and the Potential Economic Impacts in Latest PwC Survey
As the country begins contemplating when and how to restart the economy amid the ongoing COVID-19 pandemic, the latest CFO survey from Big 4 firm PwC published on April 28 shows the level of concern among corporate leaders holding steady.
The new installment of PwC’s biweekly survey series took the pulse of 305 finance leaders for the push-pull week of April 20, as coronavirus cases in many states had started to level off, several stay-at-home orders were further extended and plans for reopening certain businesses began to take shape. Against this backdrop, 72% of respondents continue to believe COVID-19 has the potential for “significant impact” to their business operations, down only slightly from 74% two weeks prior. What has emerged in recent weeks, however, are more serious discussions about companies returning to some semblance of pre-lockdown operations.
“U.S. finance leaders are focused on shoring up financial positions, as U.S. businesses head into a period of even more operational complexity while they orchestrate a safe return to the workplace,” according to the study. “Back-to-work playbooks put workforce health first, as companies set course for a phased-in return to the workplace that will not be uniform across the U.S. or internationally. Returning employees and customers are going to experience a work environment that will differ in marked ways as a result.”
To illustrate the potential changes that lie ahead, 49% of respondents say remote work is here to stay for some roles, as companies shift to alternate staffing and reconfigured worksites that promote social distancing. Meanwhile, 77% of surveyed CFOs expect to see new safety measures like testing put into place, and 50% are planning on higher demand for enhanced sick leave and other policy protections for employees.
But companies are also beginning to realize that the business recovery from the impacts of the virus will take longer. As measures of manufacturing and service activities continue to drop and demand continues to shift, 48% of CFOs believe it will take at least three months to return to normal, up from 39% in the previous survey.
In terms of the financial fallout they expect from the pandemic, 53% of respondents are projecting a decline of at least 10% in company revenue and/or profit this year. And as cost pressures intensify, 32% of these CFOs expect layoffs to occur (up from 26% two weeks ago) and 70% are considering deferring or canceling planned investments, mostly in the areas of facilities and general capital expenditures, but not as much in investment programs considered important to future growth such as digital transformation, customer experience or cybersecurity/privacy.
As the recovery from COVID-19 slowly evolves, the study advises leaders to remain committed to the spirit of open communication and people-first policies.
“With most firms expecting to bring people back on-site in phases, leaders will need to help employees adjust to a changed environment while still managing the well-being, engagement and productivity of all workers. Purpose-led communication will continue to be critical to keep people informed, and leaders should demonstrate empathy while helping employees adjust to what will likely be an extended transition period.”
Updated April 14, 2020: PwC Survey Finds CFO Concerns Growing As Pandemic Continues
Big 4 firm PwC, in its third survey since COVID-19 stay-at-home orders took effect, finds that CFOs are increasingly worried about financial impacts, recovery time and cost-cutting, including layoffs and furloughs.
This survey of 313 finance leaders covered the week of April 6, when unemployment claims surged and attention turned to the federal stimulus package as deaths from COVID-19 mounted.
The top concern of respondents is the financial impact of the coronavirus as a recession looms and cash flow tightens. The survey says 75% are worried about the pandemic’s effects on results of operations, future periods, and liquidity and capital resources. A potential global recession is feared by 70%.
Also, CFOs are far less optimistic about the time it will take for their businesses to recover.
“Hopes that the outbreak will dissipate quickly are receding,” according to the PwC COVID-19 CFO Pulse Survey. “Only one in five respondents now believes they’ll be back to business as usual within a month once the outbreak ends. In contrast, during the week of March 9, as shelter-in-place orders started taking hold in the U.S., 66% of U.S. and Mexico respondents estimated that their companies could recover within a month.”
CFOs also noted that since so many changes are taking place now, with employees working remotely and customer interactions changing, that recovery will be complicated, as they try to predict what a new normal will look like after the outbreak ends.
As cost pressures increase, workforce reductions in May are anticipated by 26% of respondents and 41% expect furloughs. “This marks a significant change. Two weeks ago, only 16% of leaders in the U.S. and Mexico expected layoffs, while 44% expected furloughs. Separation of the workforce, or layoffs, is typically considered a means of last resort,” the survey says.
In another effort to cut costs, 67% of the U.S. leaders surveyed say they are considering deferring or canceling planned investments in the following areas: facilities/general capital expenditures 82%, workforce 67%, operations 55% and IT 53%.
To cope, nearly half (49%) of finance leaders surveyed say their company plans to take advantage of various government relief programs, most notably the $2 trillion CARES Act, which covers loans, loan guarantees, grants, assistance payments, contracts and tax incentives. Among the leaders who expect to make use of these measures, 81% expect to defer tax payments.
PwC is conducting a biweekly survey of finance leaders in the U.S., Mexico and 19 other territories. The next set of results will be released April 27.
The PwC survey says that finance leaders are making tough decisions as they prepare for a recession. “Helping people feel more prepared and informed by being transparent about the health of the company is crucial. Company leaders who are forthright about the decisions the leadership team is making — and how the workforce may be affected — can build trust by helping people stay informed, even if the news isn’t good. Trust and transparency are also a key part of stakeholder management. The situation is uncertain, and nobody can be sure what will happen, but providing regular updates means stakeholders won’t be caught off guard.”
March 17, 2020: PwC Study: CFOs Anxious About Massive Coronavirus Impact
Fifty finance leaders in the U.S. and Mexico are very concerned that the coronavirus pandemic may lead to a global economic downturn, according to a new survey by Big 4 firm PwC.
That No. 1 concern, cited by 80% of those surveyed March 9-11, is followed by worries about consumer confidence (48%), financial operations (48%) and workforce productivity (42%). The CFO Pulse Survey also revealed that every CFO or finance leader says their business is impacted by the coronavirus.
“We don’t think it’s a time for companies, or others, to hold onto original plans for 2020,” says U.S. Chair Tim Ryan during a media briefing, according to CFO.com. “It’s clear that the virus will change the plans of almost every company.”
Companies that are ready will feel fewer impacts, he adds. “Those that have been working very hard to control things like cost structure and liquidity will fare better, and those that weren’t will be more adversely affected.”
Most of the respondents predict the crisis will impact their revenues and profits, with 58% expecting a decrease and while 40% saying it’s too difficult to assess now. The leaders are considering financial actions as a result of the outbreak, with 62% planning cost containment measures, 44% adjusting guidance and 32% deferring or canceling planned investments.
Optimism was reflected in the survey as well, with 66% of respondents saying “business as usual” could return to normal in less than a month if the COVID-19 were to end today. Another 24% said it would take up to three months.
“The longer-lasting effects of the outbreak on consumer habits are difficult to predict, but some companies are already updating strategies in the face of temporary – and potentially permanent – changes in some markets or business models,” the survey report says.
PwC is conducting biweekly surveys of finance leaders in the U.S. and Mexico. The next set of results will be released on March 30.