A majority of middle-market CFOs are predicting an economic recovery and revenue increases for their companies in 2021, according to a new survey by BDO USA.
The 2021 BDO Middle Market CFO Outlook Survey, found that 60 percent of the 600 CFOs polled at midsized companies anticipate economic recovery, while 56 percent expect revenue increases, in 2021. In addition, 62 percent of the survey respondents anticipate their company will be thriving a year from now.
Nearly three-fourths of the middle-market CFOs said their companies received government assistance as a result of the crisis. Cost cutting and reorganization for resilience are the top priorities for many CFOs.
Zigas is an advisory committee member of the Coalition for FHLB Reform. He is a former president of the National Low Income Housing Coalition, and former senior vice president for community lending at Fannie Mae. He is principal at Zigas & Associates LLC and senior fellow at the Consumer Federation of America.
Donny is the founder and managing director of IntrapriseTechKnowlogies LLC, an advisory-focused CPA firm providing innovation acceleration and business transformation services for small businesses, middle market organizations, and nonprofits. He is a recognized thought leader and educator in the accounting technology, IT risk management, and performance management areas. His dedication to helping accountants and organizations strategically leverage technology while proactively managing their business and technical risk is paramount.
He is also the inspiration architect for the Center for Accounting Transformation, a mind trust of innovative thinkers and experts who help enable transformation by guiding accountants, auditors, and tax practitioners through the adoption and changes required in order to step into the future of the accounting profession. It's research-enabled courses, coaching, and competency development accelerate business transformation to #improvethworld.
Yasmin Farahi is deputy director of state policy at the Center for Responsible Lending, which provides nonpartisan research, analysis and advocacy to create financial fairness and economic opportunity for all.
The pandemic made an impact on nearly every company, and 39 percent of the CFOs polled indicate that the pandemic accelerated digital transformation at their companies, while 38 percent said it opened new expansion opportunities for products or services and 31 percent for new geographies.
“Unprecedented was the buzzword in 2020 for good reason,” said BDO USA CEO Wayne Berson in a statement. “Many middle-market companies persevered through levels of transformation and disruption in one year akin to what some companies experience in a full lifecycle. But rather than hunker down and endure, middle market leaders endeavor to move forward to refresh strategy and enhance agility. While we’re not out of the woods, the middle market is poised to pivot to new levels of potential.”
Deal flow was unsteady last year as CFOs assessed and reassessed the possible outcomes of the pandemic’s impact on their business. However, CFOs appear to be more optimistic this year, with 29 percent planning to seek private equity investment, 24 percent want a merger or acquisition and 20 percent hope to pursue an IPO.
While returning to the office or floor is critical for many CFOs, 43 percent of the respondents said they would increase or establish permanent remote work options. Office space is likely to be downsized, with 28 percent of the CFOs polled planning to eliminate or consolidate their current real estate footprint. CFOs also intend to build a more flexible workforce through automation (38 percent) and outsourcing (32 percent).
The main threats cited by the CFOs include a prolonged economic downturn, competitive pressure, supply chain disruption and falling behind on technology or innovation.
Coming out of an election year, tax challenges are also going to be important, with understanding total tax liability (19 percent) and navigating shifting trade and tariff policies (17 percent) among the top challenges cited by the CFOs. Managing disclosures and risk factors is also a top financial reporting challenge as the CFOs try to assess how to communicate impact of COVID-19 on matters that may be material to stakeholders.
