Positivity and proactivity will shape finance leaders’ strategy
The escalation of COVID-19 in 2020 and lockdowns in 2021 have left many organizations reeling as they adapted to change. Nevertheless, UK and US finance leaders are now preparing for a year of increased investment and growth as economic activity increases.
In our report – The Proxima Finance Leaders Outlook 2021 – we publish findings from, and analysis of, an exclusive survey of Chief Financial Officers (CFOs) and Financial Directors (FDs) in the United Kingdom and United States.
The report contains insights from finance leaders working in some of the most successful businesses in the UK and US. The findings reveal that positivity and proactivity will shape finance leaders’ strategy as they rebuild their businesses and the economy over the next 12 months. Read the full report here or keep reading to find out more.
Short on time? Download our report for all the insights
Key findings from the research include
Gareth Evans, CEO, Proxima
“Finance leaders have entered 2021 in an optimistic mood, which bodes well for a strong economic recovery this year. It is clear that businesses are already looking ahead to the post-COVID world and how they can ensure their businesses are ready to grow.”
1. There is smoother sailing ahead after a year of economic and political volatility
Political change in the UK and US has been received with overwhelming positivity by finance leaders.
New policies on COVID-19 were expected to have a ‘positive’ or ‘extremely positive’ impact over the next 12 months according to 67% of finance leaders, and new policies on global trade were expected to have a ‘positive’ or ‘extremely positive’ impact over the next four years according to 81% of finance leaders in the US.
2. This positivity will be reflected by a year of increased investment and spending
The positivity of the economic outlook is reflected in a loosening of finance leaders’ purse strings, with the vast majority indicating there are significant financial investments to come over the next 12 months. In the US, 82% expect to make ‘significant financial investments’ in the next year, whilst in the UK, 79% expect to make ‘significant financial investments’.
The success of these investments will be heavily influenced by third-party suppliers and good supplier management.
Consequently, developing a strategic partnership with your suppliers is a must. Investing in your supplier management and spend will not only deliver short-term savings and instant payback, but will also help achieve longer term goals of improving the operational and financial health of your organization.
Find out more about why you should be following suit and focusing on your supplier management and spend for 2021 in our article by clicking the button below.
3. Finance Leaders will take the initiative in times of uncertainty
While there may still be uncertain times ahead, finance leaders will be taking a proactive approach to building business resilience. Nearly 50% of CFOs said their strategy would be to build overall business resilience in 2021, which includes measures like increasing cash flow and reducing costs.
As shown in our “State of Spend” report, Fortune 500 companies spend 75% of their outgoings on suppliers, with the figure standing at 70% for the FTSE 350. It also showed that cutting supplier spend by 10% would generate a 32% surge in EBITDA for Fortune 500 companies. Similarly, FTSE 350 companies would get a 27% EBITDA boost from a 10% cut.
This report suggests finance leaders should be looking to supplier costs as a primary source of saving money and increasing flexibility. At a time when companies are seeking to reduce outgoings and create a more variable cost base, supplier costs are where the biggest impacts can be made. Read the full report here to find out the strategic importance of suppliers in building strong business resilience.
Whether looking to free up spend to invest in new business areas or bring in external expertise to accelerate a project, finance leaders will be at the heart of many business decisions in 2021.
4. The nature of work will permanently change
The nature of work has drastically changed over the past year and finance leaders indicate that a shift in strategy towards people, teams and facilities lies ahead.
While some companies used to offer the ability to work remotely as an additional benefit, in 2020 it became the ‘new normal’ for businesses around the world. Finance leaders now believe that remote working is here to stay.
47% of US and 58% of UK finance leaders say that some form of remote working would remain in place permanently, while only 11% across both markets indicated they would be returning to the office full time.
The challenge for many is balancing the need to deliver increasing workloads at speed with their teams working remotely.
Finance Leaders Outlook 2021
60% of all finance leaders surveyed said they are ‘positive’ about the economic outlook over the next 12 months and 20% said they were ‘extremely positive’
5. Social value has quickly risen up the finance leaders’ agenda
The results show an increasing awareness of the importance of suppliers within social value priorities.
The collective mood for social and sustainable change, which has been increasing around the world, has been heightened by the pandemic, and finance leaders are calling for a change. 69% say that the social value has increased as a budget priority as a result of the pandemic. We are also seeing a major rise in green energy initiatives as businesses and politicians are now looking to rebuild the economy with sustainability at its core.
We talk more about this in our article “Three areas that will shape the energy market in 2021”.
6. Procurement will be an important driver of innovation and recovery
The shifting role of procurement in underpinning business strategy was also highlighted by finance leaders.
The evolution of the current business landscape means finance and procurement will be working closer than ever to cut costs, grow and innovate in a strategic partnership.
While finance leaders told us they would describe procurement as a ‘savings delivery function’, they said that procurement should in fact be measured against ‘revenue generation’.
Now that businesses are looking to the future with positivity, there are new challenges that procurement is at the heart of tackling. To make the most of this, finance leaders need to view procurement as an added value and not just a way to cut costs.
If you would like to read more on this subject then our report expands on each of the elements we have explored here:
Talk ‘The Proxima Finance Leaders Outlook 2021‘ through with one of our consultants
We would welcome the opportunity to understand what you may be looking to achieve for 2021. We have a number of examples of how we’ve worked with organizations around the world to drive value and improve efficiency. Please complete the short form and a member of the procurement consulting team will be in touch.