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CFO Signals™: Q1 2021

After a tough year, CFOs express increased optimism and expectations for economic growth

What North America’s top finance executives are thinking—and doing.

CFOs' outlooks appear to be improving overall and shifting upward for key operating metrics, with the exception of earnings growth. Despite myriad internal and external risks, including the well-being of talent, ongoing concerns over the pandemic, and the potential for increased taxes, CFOs have a greater appetite for risk-taking.


The economies — CFOs’ perceptions of the North American economy are growing more positive, with 29% citing current conditions as good, compared to 18% the previous quarter. The good news is that just 13% of CFOs consider North America’s economy as bad, compared to 26% and 60% in 4Q20 and 3Q20, respectively. Looking 12 months out, CFOs’ perceptions appear rosier: 73% rate it as better, up from 59% in 4Q20.

Their perceptions of China’s current economy are more positive, with 51% considering it good, and 6% as very good. A year from now, 53% and 11%, respectively, expect China’s economy to be better or much better.

CFOs’ perceptions of Europe’s current economy are far less positive: Only 7% consider it good, and 48% view it as bad and 1% as very bad. A year out, a slightly more positive view emerges, with 36% of CFOs believing it will be better or much better, and just 8% of CFOs expecting it to be bad.

Capital markets — More than three-fourths (83%) of CFOs consider equity markets overvalued; 2% see them as undervalued, while the remainder stand somewhere in between. On debt financing, 61% of CFOs view it as very attractive and 30% somewhat attractive. Equity financing is very attractive and somewhat attractive for 18% and 37% of CFOs, respectively, while 17% consider it unattractive.

Risk-taking and risk concerns — Some 66% of CFOs think this is a good time to take on greater risks, up from 49% in 4Q20 and a survey high. Internal risks cited by CFOs include a concern for the well-being and retention of talent, strategy execution, and growth, as well as cost containment. Among the external risks they cite are ongoing concerns over the pandemic and timing of reopening, potential regulatory changes, the health of the economy, and cyberthreats.


Company financial prospects — Compared to three months ago, more than half of CFOs (57%) feel somewhat more optimistic about their company’s financial prospects, and 10% are significantly more optimistic. Only 3% are somewhat or significantly less optimistic, while the remainder see their company’s financial prospects as broadly unchanged.

Expectations for key operating metrics (next 12 months)

Revenue and operating results — Expectations for revenue growth rose from last quarter’s 7.7% to 8.5%—the highest reading in a decade. The US improved ahead of Canada and Mexico. Earnings growth expectations declined from last quarter’s 13.8% to 12.8%. Canada and Mexico declined, while the US improved slightly.

Dividends and capital expenditures — Expectations for dividend growth rose from last quarter’s 2.5% to 3.3%—better, but still below the long-term survey average of 3.7%. Capital spending improved from last quarter’s 8.0% to 10.2%—the highest level since 2018. Mexico significantly improved from 6.6% to 17.3%.

Domestic hiring and wages/salaries — Expectations for growth in domestic hiring rose from last quarter’s 1.7% to 2.7%, led by the US, with Mexico weakest. Domestic wages/salaries increased overall to 3.1% (same for US) from 2.4%, led by Mexico.

Business outlook highlights

Finance leadership beyond the pandemic

This quarter’s survey also asked CFOs about what might change in their finance organizations, their roles, and their companies in a post-pandemic environment compared to pre-pandemic conditions. Their responses indicate changing expectations, increasing demands of them and their teams, and shifts in how and when the work of finance might get done.

Return to pre-pandemic (or near-normal) operating levels

More than one-third (37%) of CFOs say their company is already at/above its pre-crisis (or near normal) operating level. Sixteen percent of CFOs estimate 3Q21 for when their company will return to pre-crisis or near normal operating levels, and another 16% estimate 4Q21. Worst scenario is 3Q22 or later when 10% of CFOs say their company will be back at pre-crisis operating levels.

COVID-19 vaccine requirements for return to work on-site

Eighteen percent of CFOs expect to require all employees or employees in some functional areas/roles (except those with a medical/religious reason, etc.) to receive a COVID-19 vaccination in order to return to physical premises/operations. Forty-one percent do not expect any vaccination requirements, although some will encourage vaccination, and 35% don’t know or are undecided.

Travel expenses post-pandemic

Nearly three-quarters (73%) of CFOs expect travel expenses post-pandemic to fall between 50% to 80% of pre-pandemic levels. Twelve percent of CFOs expect they will be 81% to 100%, and 2% project they will be higher than pre-pandemic levels.

Pandemic’s impact on the scope of the CFO’s role

More than half of CFOs (54%) report having higher demands from their executive/leadership teams since the beginning of the pandemic, while 37% say they have more work/volume within the pre-pandemic areas of their functional responsibility. More than one-quarter (26%) indicate they now have broader functional responsibility, (e.g., more groups reporting to them) than prior to the pandemic.

Lines of reporting for core and non-core functions

In core finance, the functions that most commonly report directly to the CFO are controllership/accounting, treasury, corporate finance, FP&A, tax, and investor relations. Management reporting and financial reporting are more likely to report indirectly to the CFO. CFOs also have significant direct responsibility over internal audit and enterprise risk.

Finance operations

Slightly more than three-quarters of CFOs expect more of their finance work to be completed remotely post-pandemic compared to pre-pandemic levels. Nearly a quarter expect to have fewer finance staff internally, and 21% expect more outsourced finance services.

Expectations for finance staff to work on-site post-pandemic

Less than one-third (31%) of CFOs expect the majority of their finance staff to work four or more days on site post-pandemic, and 45% expect the on-site work week to be three days. While results vary by industry, some have similar expectations: 40% of CFOs in Manufacturing and Technology each selected four days or more, as did Services (39%) and Financial Services (38%).

Wish lists for functional improvement

FP&A and management reporting are by far the functions that CFOs would most like to improve, with 63% of CFOs citing FP&A and 46% management reporting. One-quarter of CFOs indicate controllership/accounting as the function they would most like to improve. That was followed by treasury, investor relations, internal audit, and financial reporting, and to a lesser degree tax and corporate finance.

Desired skillsets/expertise

Data analytics and forecasting are the skillsets CFOs would most like to bolster on their finance teams. Skills in technology, digital, and automation were the next most-often cited. Business knowledge, acumen, and judgment, including references to confidence and ability to deal with ambiguity, followed on CFOs’ wish lists. Finally, a strategic mindset and communications skills were cited.

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