Survey: 85% of Financial Leaders Preparing for Recession

OneStream, a large corporate performance management (CPM) solutions company based in Rochester, announced the results of its mew Enterprise Financial Decision-Makers Outlook — October 2022 survey, showing 85 percent of financial leaders are reforecasting in preparation for an impending recession.
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A large majority of financial leaders are expecting a recession, according to the Enterprise Financial Decision-Makers Outlook — October 2022 survey from OneStream. // Stock Photo
A large majority of financial leaders are expecting a recession according to the Enterprise Financial Decision-Makers Outlook — October 2022 survey from OneStream. // Stock Photo

OneStream, a large corporate performance management (CPM) solutions company based in Rochester, announced the results of its mew Enterprise Financial Decision-Makers Outlook — October 2022 survey, showing 85 percent of financial leaders are reforecasting in preparation for an impending recession.

The study, conducted by Hanover Research, targeted finance leaders across North America and identified responses to economic challenges and budget priorities for the upcoming year.

Four percent reported a recession will not affect their business in 2023. Almost half of the leaders surveyed, 47 percent, identified economic disruption as the largest threat to business in 2023.

This is a 17-percent increase compared to the Enterprise Financial Decision-Makers Outlook — May 2022 version of this survey in which only 30 percent of respondents reported economic disruption as the largest threat.

CFOs and finance leaders are not expecting an economic break until the later part of 2023. Three quarters expect ongoing economic and supply chain challenges to last into mid-to-late 2023 or beyond, and 72 percent expect that inflation won’t recede until the same time frame.

To address this outlook, 56 percent of respondents noted they are increasing prices or slowing hiring, with 47 percent reducing operational costs, and 39 percent renegotiating contracts with suppliers.

Increased stakeholder interest in environmental, social, and corporate governance (ESG) initiatives is putting pressure on organizations to invest in these initiatives. Additionally, the proposed new SEC ESG disclosure guidelines are also causing organizations to re-think their ESG strategy.

Thus, despite the looming recession, most businesses will invest in ESG and diversity, equity, and inclusion (DEI) the same, if not more, in 2023. Close to half, 48 percent, of organizations plan to invest more in ESG initiatives next year, and 47 percent will invest more in DEI. Some will invest the same, with 39 and 38 percent neither increasing or decreasing investment in ESG and DEI, respectively.

Forming internal teams account for half of this spending at 43 percent, tasked with defining policies and disclosures ahead of potential mandatory ESG disclosure requirements from the SEC or other regulators.

Other financial leaders are implementing new ESG/sustainability strategies at 41 percent and investing in software to support the collection and reporting of ESG data at 35 percent. For the latter, extensions of CPM software are currently the most used software for supporting the collection and reporting of ESG data.

The Fall 2022 survey also showed the talent shortage and great resignation was identified as the number two concern for financial leaders. When asked about their hiring priorities, 68 percent said problem solving/decision making and 67 percent said strategic and business-oriented thinking are considered the most valuable skills for financial leaders.

Communication skills and quantitative/analytic skills are also cited as important by half or more of respondents.

The looming recession will prompt hiring plans to be conservative in 2023, especially in accounting and finance departments. To balance out the shortage of talent, finance leaders will need to invest in more automation and digital technology to increase productivity.

Fifty-seven percent are planning to invest more in cloud-based planning and reporting solutions in 2023, and 48 percent will invest more in predictive analytics. A majority, 61 percent, are already using cloud-based planning and reporting solutions, while 37 percent are utilizing predictive analytics.

Meanwhile, only 37 percent of companies predict investing more on machine learning. This is significantly fewer than predicted both last fall and earlier this year. With AutoML technology poised to reduce the barriers to adoption of machine learning in organizations, half of all financial decision-makers say their organizations plan to investigate AutoML solutions.

In fact, 28 percent already have adopted AutoML solutions. Although cost is still an obstacle, 48 percent of organizations will continue investigating whether to invest in AutoML or not.

“The current economic landscape will continue to challenge finance leaders and organizations well into the new year,” says Bill Koefoed, CFO at OneStream. “Agility will be a key differentiator for businesses looking to succeed in the new year.

“Financial leaders must ensure they have the correct technology in place to accurately forecast scenarios and plan accordingly. OneStream is proud to provide our customers with an intelligent finance platform that helps them prepare for the numerous factors impacting their businesses.”

The commissioned study, conducted by Hanover Research in Sept. 2022, sourced insights from 657 finance decision-makers in the U.S., Canada, and Mexico. All individuals hold a management position (C-level executive, vice president, director, controller) in finance. Respondents work at companies across numerous industries and varying revenues, with 34 percent employed by companies with over $1 billion in annual revenue.

For the full findings of the research, click here.

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