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COVID-19: 51% of CFOs are preparing to lose up to 30% in revenue

17 Apr 2020

Just over half of CFOs reveal they are preparing for a revenue contraction of up to 30% this year due to the economic downturn amid COVID-19, according to research from Gartner.

The survey, which quizzed 145 CFOs and other senior finance leaders last week, also revealed that 28% of respondents believe the impact on their organization’s revenue could be higher than 30%.

An even 50% of CFOs and financial leaders plan to suspend long-term investments on a ‘selective basis’, while 15% said they were getting ready to totally suspend such investments.

An additional 30% said they have no intention to suspend most investments.

“Most CFOs have told us they are using the most severe downside scenarios to inform their decisions right now,” says Gartner Finance Practice vice president of research Alexander Bant.

“This is leading CFOs to consider drastic cost management actions across April and May.”

When CFOs were asked how these downside scenarios are impacting their ability to fund long-term growth investments, 70% of CFOs said they are now showing caution in this area.

“We know from studying companies that were successful during prior business cycle turns, that investing in growth bets ahead of curve is vital to come out on top,” says Bant. 

“Right now, we see CFOs clamping down on funding for these growth bets. The companies that emerge as leaders in their industry will quickly pivot and replace previous long-term growth investments with new ones. 

“Currently though, only 5% of companies appear to be making these changes.”

For CFOs to guide the business through rethinking these investments, they need a solid theory of how their customer is changing, says Gartner.

In normal conditions, the most effective CFOs spend between 5-10% of their time with customers. 

But in crisis mode, Gartner recommends CFOs to spend more time on the front line listening to how their key customers are modelling out the recovery and what things will change.

CFOs also indicated in the poll that most expect little or no delay to closing their books at the end of Q1, while just 3% expected a delay of more than three days, 65% expected no delay, and 28% expected a delay of three days or less.

“These results show that the finance function is generally coping well with remote working and is able to carry out a lot of work as usual,” says Bant. 

“In fact, recent data from another Gartner poll showed CFOs warming to the idea of remote working as a cost management tactic.”