Dive Brief:

• Nearly two-thirds (61%) of CFOs and controllers expect increased revenue in 2023, but only 18% plan to increase spending, according to the 2023 Controller CFO Sentiment Study.
• “There are high expectations to capitalize on growth, to strike while the iron’s hot, and capitalize on market share, and yet to do so, with a much lower investment in running the business,” Mark Floisand, executive vice president of product market at Sage, said in a webcast discussing the findings. 
• CFOs and respondents also rated interest rates, geopolitical risks, inflation, talent, and a recession as issues that “keep them up at night,” in that order, the study found.

Dive Insight:

Despite a challenging economic and business environments, the 300 North American CFOs and controllers surveyed for the study remained relatively optimistic about their company’s prospects, with nearly half (44%) of respondents, who were mostly in the middle market, saying they expect improved financial performance this year.

“I think this is really telling,” said Floisand. “When we look at the headlines recently of layoffs, the thousands cut here, thousands cut there, these tend to be the big company stories. At smaller firms we see a lot more resilience,” he said.

Just this week, The Walt Disney Company announced plans to reduce headcount by 7,000, and other big tech and media companies have shared similarly grim announcements. 

Other indicators like year-over-year growth and hiring sprees indicate that the middle market is fairly optimistic about the economic climate.

“We see smaller companies toughing it through these times. Cutting headcount is not their instinct in a downturn — there’s a resilience in small businesses that seems to talk through pessimism,” said Floisand.

In terms of financial metrics, 61% expect an upswing in revenue, 48% in profits and 41% in gross margin, the study found. 

Meanwhile, results also showed that a third of respondents plan to reduce their spending in 2023, with only 18% planning to increase spend. 

“There is clearly a tension here,” said Floisand. “To grow, you need to invest in technology to fuel growth and not necessarily just pile on headcount because that doesn’t scale very well,” he said.

Additionally, although 44% said they expect an improvement in their financial performance in 2023, those expecting similar results as 2022 were not far behind at all, coming in at 39%. 

Ultimately, “growth drives everything,” said Floisand, “and if you are able to invest in growth most other things follow,” he said.