CFOs Take A Macro View Of The Future

The CFOs and treasurers throughout the globe are popping their bubbles when it comes to economic outlook. A new report by Deutsche Bank and the Economist Intelligence Unit (EIU) explored how financial managers are handling the changing winds of the economy and found that macroeconomic conditions are now top of mind as treasurers fight to grow their businesses.

According to “Managing Risk in Challenging Economic Times,” released earlier this month, the majority of CFOs admit that they struggle to stay on top of how quickly the macroeconomic environment is changing. About 40 percent told researchers that global economic growth is among the top macroeconomic risks for their enterprises.

The concerns may be surprising, considering how many CFOs in these regions are cash-rich. EIU and Deutsche found that 80 percent of the professionals surveyed hold significant levels of excess cash, causing treasurers to focus on either expanding or modifying their investment strategies as their way to more adequately gain control in a changing economic climate. Low and negative interest rates have especially motivated these money managers to renew their investment strategies, the report noted.

Their investment strategies are also impacted by the issue of currency risks and inflation, both cited by about a fifth of survey respondents as a top macroeconomic concern. And while Brexit isn’t expected to negatively impact corporates in the near term, nearly half of treasurers said the event is likely to have a negative impact over the next three to five years.

Low interest rates aren’t the only factor when it comes to how treasurers and CFOs prioritize their time. According to EIU and Deutsche, these professionals also cite heightened financial regulations as having a significant impact on their professional lives, with 40 percent expecting their workload to increase as a result. According to the report, regulatory and tax risks were cited as the second top macro-concern for treasurers in the year ahead, cited by a quarter of survey respondents.

“Having experienced several years of increasingly onerous compliance burdens, several treasurers express frustration with some pieces of regulation that are seen as creating a lot of work without delivering any perceived benefits, such as greater transparency or stability in the financial system,” the report noted.

Most of the CFOs surveyed also said technology is changing the way they do business, and many of these professionals are reluctant to adopt disruptive tools. While about 70 percent said they acknowledge technological innovation as gaining traction within their company’s treasury department, the concerns over these tools are also growing, with 70 percent also citing cybersecurity as a top worry when it comes to adopting and implementing new technologies.

Researchers said that, with corporate treasurers struggling to gain a handle on all of these factors — macroeconomic trends, regulation and technology — they are also tasked with serving as a point of contact within their enterprises and rising up as professionals that help to make strategic decisions for companies within this uncertain climate.

“The macroeconomic, regulatory and technological challenges are not just shaping the outlook of corporate treasurers,” EIU and Deutsche Bank said in the report, “they are also changing how the function is interacting with the rest of the business.”

“Our whitepaper confirms that partnering with the business has increased in areas such as mergers and acquisitions and working capital management,” the report continued. “Encouragingly, more than eight in 10 CFOs say that leadership teams now increasingly consult corporate treasurers on strategic questions.”

When it comes to sentiment about the future of their companies, corporate treasurers and CFOs are pretty split. According to the report, 39 percent said they expect the overall climate to improve over the next year, 32 percent said it will stay the same and 29 percent predicted it will worsen.