- Global survey reveals aggressive approach to spending and investment -
MARKHAM, ON, May 15, 2012 /CNW/ - Canadian finance executives are taking an aggressive stance on business growth, according to the fifth annual American Express/CFO Research Global Business & Spending Monitor, a survey of 541 senior finance executives from the U.S., Europe, Canada, Latin America, Asia and Australia. The results of the global survey underscore that Canada is among the most determined when setting growth targets, with 73 per cent of Canada's senior finance executives seeking more aggressive growth for their business in 2012 — just shy of their counterparts in the growth economies of India (75%) and Argentina (85%).
"Canadians are renowned for their non-aggressive nature, and until recent years the same was true for Canadian businesses," says Paul Parisi, Vice President & General Manager, Global Corporate Payments, American Express Canada. "Canadian companies are revealing a new toughness in pursuing business growth more aggressively than many of their global colleagues."
Globally, finance executives continue to express restrained optimism about the prospects for economic growth, with 64 per cent reporting expectations for modest or substantial economic expansion over the next 12 months. In terms of when finance executives expect the global economy will gather strength, Canada sits just above the global average (46%), with half of Canadian CFOs (50%) expecting the Canadian economy to return to robust economic growth this year. Respondents in the U.S. report a more extended growth horizon, with the majority of executives (75%) anticipating economic growth to gain traction at some point after the close of the fourth quarter.
This growing confidence in the Canadian economy is supported by strong spending and investment to boost top-line revenues, balanced with efficiencies to strengthen profitability.
Boosting the Top-Line: Stimulating Growth through Spending
Canadian CFOs are optimistic in their country's growth prospects, with 19 per cent expecting to see substantial economic expansion over the next 12 months. By comparison, just two per cent of their peers in the U.S. foresee substantial expansion during the same time period. Canadian senior finance executives are also the highest globally (31%) to report an aggressive approach to spending and investment over the next year - a sharp contrast to most senior finance executives around the world who collectively are taking a more conservative approach. About half of all survey respondents from around the world (49%) expect their company to take a modest approach to spending and investment to support top-line growth, followed by 35 per cent who expect their companies to control spending tightly.
"This trend is likely a reflection of the cash-preservation strategy we have seen among Canadian CFOs in the past year," said Parisi. "With many companies looking to stimulate growth, Canadian finance executives have plans to dip into their companies' cash stockpiles."
In 2011, 75 per cent of Canadian CFOs reported their companies were pursuing a deliberate cash preservation strategy; with nearly half (44%) revealing that their companies were holding cash in order to seize investment opportunities more quickly in the future. But Canadian executives now feel the time is right to spend down some portion of their cash reserves, with 67 per cent planning on spending down a portion of their reserves this year.
Striking a Balance: Top-Line Growth Meets Bottom-Line Efficiencies
Despite the ambitious growth targets set by Canadian CFOs, the survey results show the majority of those executives plan on spending about the same portion of their budgets as last year in every major spending category, including indirect line items such as travel and entertainment (64%), depreciable assets (61%) and enterprise-level IT systems (56%). These findings suggest that although Canadian executives are poised to invest in top-line growth, they are planning to continue exercising the financial discipline that they acquired during the recent downturn.
However, the number of respondents who anticipate that their companies will spend more in most major spending categories is slightly higher those who anticipated doing so last year. Additionally, Canadian executives plan to increase their investment in areas that contribute to growth and profitability, including:
- Sales and marketing activity (53%)
- New production capacity (49%)
- Improving administrative (50%) and production (47%) efficiencies
Attracting Top Talent: Pool Running Dry for Qualified Employees
Although 86 per cent of Canadian executives are somewhat or very confident that they will reach their growth targets in the coming year, almost half of those respondents (44%) cite the rising cost of labour and scarcity of well-qualified employees as the greatest threat to their company's prospects over the next year. Nevertheless, 55 per cent of Canadian executives plan on increasing their headcount in the coming year; about the same proportion (56%) cite their primary motivation for hiring as acquiring specialized skills, expertise or experience.
"Strong talent is the fuel of good business," says Parisi. "The economic engine is running on full-steam in Canada, but attracting and retaining qualified employees weighs heavy on the minds of Canadian executives."
About the Research
CFO Research Services surveyed 541 senior finance executives at large global companies across a wide range of industries in the United States, Canada, Latin America, Europe, Asia, and Australia. Company revenues ranged from $500 million to more than $20 billion. The research program, which included an online survey and interviews with senior finance executives, was completed in March 2012.
About American Express in Canada
American Express in Canada operates as Amex Bank of Canada and Amex Canada Inc. Both are wholly owned subsidiaries of the New York based American Express Travel Related Services Company, Inc., the largest operating unit of the American Express Company. Amex Bank of Canada is the issuer of American Express charge and credit cards, with outstanding products like the American Express(r) Gold Rewards Card, and the American Express(r) AeroplanPlus(r) Gold Card. Amex Canada Inc. operates the Corporate Travel and Travellers Cheques divisions in Canada. American Express opened its first offices in Toronto and Hamilton in 1853 and now employs 3,700 Canadians coast-to-coast. For more information, visit AmericanExpress.ca or connect with us at Facebook.com/AmericanExpressCanada.
About CFO Research Services
CFO Research Services is the sponsored research group of CFO Publishing LLC, which produces CFO magazine, CFO.com, and CFO Conferences. For more than 25 years, CFO Publishing has been a trusted source of insight into the issues that matter most to finance professionals.
CFO Publishing LLC, a portfolio company of Seguin Partners, is the leading business-to-business media brand focused on the information needs of senior finance executives. CFO Publishing's award-winning editorial content and loyal, influential audience make it a valued resource for its readers as well as an effective marketing partner for a wide range of blue-chip companies. CFO Publishing has long-standing relationships with more than 500,000 finance executives.
SOURCE American Express