New research indicates that the finance function is becoming more flexible to meet the needs of ambitious UK businesses 

London: New research from American Express has found that the UK’s CFOs are changing the way they run the finance function to meet the needs of their businesses. The research suggests that changes are coming at a time when CFOs are feeling optimistic about business growth.

The 2018 Global Business and Spending Outlook by American Express and Institutional Investor surveyed 100 senior finance executives in the UK, half of whom work for companies with more than US$5 billion in annual revenue. It gives an important glimpse into the thoughts and strategies of the UK’s most influential CFOs.

In this year’s study, the majority (69%) of UK CFOs said that they have had to adapt the finance function, primarily as a result of shorter planning cycles, with 91% saying that this has required the finance team to become more flexible and responsive. Almost two-thirds (63%) say they have implemented new technology to help with planning, budgeting and forecasting, and 59% have included more people from across the organisation in business planning.

The research found that greater finance flexibility mirrors an increase in confidence among UK CFOs. While political and economic uncertainty remain important concerns, CFOs feel optimistic about growth and confident about revenues. UK CFOs are amongst the most confident in Europe, with 91% anticipating domestic economic expansion this year (and over a third expecting substantial growth), compared to 79% across Europe. 74% said their company’s revenue grew in the last twelve months, versus 54% globally and 69% in Europe.

The research also found that 46% of CFOs say the role of the corporate finance function can best be described as a “strategy advisor,” providing the expertise, tools and discipline to develop and execute business strategy. But there is also room for closer collaboration and engagement with the business, with CFOs highlighting the marketing function (41%) as the part of the business that could benefit most from being closer to finance.

Jose Carvalho, Executive VP and General Manager at American Express Global Commercial Services commented, ‘‘In today’s fast-paced and ever-changing market, it is vital that businesses adapt to stay successful. And, with CFOs having greater influence over business strategy than ever before, we are seeing the rise of a new finance function – one that is nimble, advisory and capable of steering British business towards ambitious growth in the future. The next challenge for finance teams across the country will be to find ways to work even more closely with other areas of the business, such as marketing and sales, to ensure that financial goals are at the heart of everything their organisations do.’’

The CFOs surveyed also highlighted how changes are bringing considerable challenges to planning, budgeting and forecasting. In particular, they point to tension between short-term and long-term objectives (76%), business planning as a distraction from day-to-day operations (65%), and over-reliance on linear extrapolation from prior performance (51%) as frequent challenges.

CFOs in the UK also say that volatility in currency markets will spur them to manage FX risk more closely in 2018.