CFO optimism is up, but cost concerns remain
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Some CFOs are choosing to look on the bright side.

Despite a potential recession, more than half of finance leaders in a recent survey expressed optimism about the economy.

Grant Thornton’s 2023 Q1 CFO Survey found that 54% of CFOs are optimistic or very optimistic regarding the U.S. economy. Additionally, more than two-thirds (68%) of CFOs projected a rise in net profits for their organization over the next 12 months, with a quarter predicting growth in the 6% to 10% range.

The survey was conducted from 228 respondents, all from U.S. companies with annual revenues from $100 million to $20 billion.

While optimism is up, confidence in controlling costs is going down. For the fourth straight quarter, CFOs said cost optimization is their top near-term focus. Confidence in their ability to meet organizational goals of controlling costs is down 9 percentage points from the previous quarter to 50%.

“Many companies are reviewing their contracts and relationships to see where they might have opportunities to reduce costs,” Sean Denham, national audit growth leader for Grant Thornton, said in a news release. “CFOs are expecting a bumpy ride as the year develops, but they’re buckling in and driving forward with the idea that the road will get smoother later in the year.”

Supply chain stress going down

For the first time since the second quarter of 2022, finance leaders did not rate supply chain as their biggest challenge. The CFOs that ranked supply chain as their top challenge fell from 35% in Q4 2022 to 32%. The future workforce was ranked the top challenge.

Moreover, 55% of CFOs said they are confident in their ability to meet supply chain needs. That’s the highest percentage since the survey added the question in the fourth quarter of 2021.

The percentage of CFOs who are not confident that they can meet their labor needs fell to just 7% — an all-time low in the survey. Forty-nine percent felt confident in meeting their labor needs, while 13% felt extremely confident.

“The optimism reflected in the Q1 survey shows that CFOs have confidence in their ability to push their organizations forward in the present conditions,” Denham said. “But in order to be successful, they must continue to partner with the rest of the leadership team and the board to find the balance between cost-cutting and investing for short-term gains and long-term growth.”

Emphasis of ESG on the rise

Finance leaders are increasingly focused on environmental, social, and governance (ESG) topics as they await guidance from the SEC on climate disclosures.

More than half of CFOs (57%) have clear ESG goals and already report progress against ESG KPIs. More than one-fourth (27%) said ESG disclosures will be one of the biggest challenges their business will face over the next six months — more than double the percentage from the 2022 Q3 survey.

Improving brand reputation, according to 56% of CFOs, is one benefit of an enhanced ESG program.