Fiscal Cliff, Global Economic Health and U.S. Growth Rate Pose Challenges - But Senior Finance Executives Express Measured Confidence Heading into Next Year
With an eye toward seizing opportunities in 2013, a majority of senior finance executives in the U.S. plan to invest in their companies to drive growth and expect to achieve higher revenues and profits next year. In fact, a new American Express survey of 200 U.S. CFOs and senior finance executives finds a notable disparity between companies' brighter view of their own prospects and concerns about sluggish economic growth in the U.S. and in key regions around the world, including the UK and Europe.
Clearly, the potential impact of the so-called "fiscal cliff" looms large, with 52% of senior finance executives predicting that negotiations will not be resolved by the end of 2012. If the combination of expiring tax cuts and across-the-board government spending cuts takes effect in 2013, 79% of senior finance executives expect an impact on their companies' growth plans.
"CFOs are continuing to shift from a defensive posture toward making smart, savvy investments so they can compete and grow," said Darryl Brown, President, Global Corporate Payments - Americas, American Express. "It's encouraging to see that companies expect revenues and profits to expand and plan to spend in areas like new product development, laying the foundation for stronger growth in the future."
2013: A Growth Opportunity for Businesses
Senior finance executives report positive sentiments for their own companies, even though they harbor continued concern for the U.S. economy in 2013. Three in five senior finance executives (59%) are prioritizing investments in growth - in contrast with just 37% that are focused on saving money in order to protect the bottom line.
Senior finance executives also report a healthy revenue and profit outlook. Three in four respondents (75%) anticipate revenue growth for their own companies in 2013, and 69% expect increased profits. They are also confident they will reach their goals: 84% of senior finance executives are certain their companies will achieve what they set out to accomplish in 2013.
This generally optimistic view also holds when projecting further into the future - 89% of senior finance executives expect to see higher revenues three years from now.
Choosing Key Targets for Investment
Domestic and international expansion are both on the agenda for a majority of senior finance executives in 2013 (61% plan to grow domestically and 53% internationally.) To drive growth next year, respondents report their companies plan to spend more in three key areas:
New technology - 61%
New product and service development - 59%
Expansion into new markets - 52%
About one in three senior finance executives (36%) expect their companies to increase headcount in 2013, primarily motivated by a focus on business growth. Companies that are hiring will emphasize areas such as customer service, IT, sales, and research and development.
Steady Business Travel Spending
Corporate investment in business travel should remain stable in 2013 - 61% of senior finance executives anticipate spending the same or more on business travel next year.
The most important reasons for making travel investments? Building new business (37%) and retaining current business (35%). However, most senior finance executives (64%) do not anticipate that corporate travel policies will loosen next year, in line with companies' disciplined approach to controlling overall spending.
"Road warriors can expect to keep visiting new prospects and current customers in 2013 because these are the kinds of trips that drive sales," said Mr. Brown. "Businesses will be looking to manage their travel programs with a focus on holding down costs through negotiated discount rates and a strategic emphasis on high value trips."
U.S. Economic Outlook is Measured
Two in three senior finance executives (67%) expect the U.S. economy to grow or remain flat in 2013. Among those anticipating growth, 50% expect it to be within the 1% to 4% range.
Consumer spending will help shore up the economy. Three in four senior finance executives (73%) expect consumer spending to remain stable or increase.
Mixed Global Prospects
Looking abroad, senior finance executives are expressing guarded optimism about the future of a number of key global economies. Nearly half of respondents expect Brazil to perform better in 2013, and a substantial percentage also feel the economies of China and India will improve next year. However, concerns continue to swirl around the UK and Europe.
How Will The Economy Perform in 2013?
Asia (ex. India and China)
Europe (ex. UK)
About the Survey
Echo Research conducted an online survey of 200 senior finance executives at large global companies across a wide range of industries in the U.S. from November 12th to 21st, 2012. Company revenues ranged from $500 million to more than $20 billion. Respondents were qualified if they have responsibility (sole or shared) for at least three of the following financial tasks: corporate planning, forecasting, and cost reporting, preparing and maintaining financial planning reports, business initiatives (e.g. opening new operations, asset acquisitions, new service launches), overseeing preparation of financial statements, or coordinating the development and monitoring of budgets.
About American Express Global Corporate Payments
Through its Global Corporate Payments group, American Express provides the Corporate Card, Corporate Purchasing Solutions, and other expense management services to mid-sized companies and large corporations worldwide. In the U.S., it is a leading issuer of commercial cards, serving more than 70% of the Fortune 500, as well as tens of thousands of mid-sized companies. American Express issues local-currency commercial cards in more than 40 countries, and international currency cards in an additional 100+ countries. www.americanexpress.com/corporate.