Fear of a second COVID-19 wave is a top concern, according to PwC's latest CFO Pulse survey.
Now that businesses have moved beyond the initial crisis management and cost reduction phase from the onset of the COVID-19 pandemic, CFOs are focusing on regaining their footing, rebuilding revenue, and reshaping their business as concerns of a second wave continue to loom.
The biggest concern for finance leaders is a second wave of coronavirus infections (59%), followed closely by the impact of a global economic downturn (54%), according to PwC's sixth COVID-19 CFO Pulse Survey. With that in mind, they are shifting their focus to how they can create sustainable business models that can adapt to the new realities of working and doing business in a challenging era of unpredictability, PwC leaders said during a webinar Monday.
If they are going to succeed moving forward, they will need to generate revenue. In many cases that will mean innovating new products and services that will work for consumers in a new reality that may require continued social distancing and other health and safety measures, PwC said.
Stabilizing and growing revenue a big focus
While the vast majority of CFOs surveyed expect COVID-19 to decrease revenue/profits (78%), their outlook has improved. In total, 13% of CFOs expect a revenue decrease of 25% or greater, down 7 percentage points from the prior survey. With a slightly more optimistic view, 11% of respondents now see a potential to increase revenue.
"They're focused on how do you stabilize revenue; they're focused on how do you grow revenue in a different environment; they're trying to study buying habits and how they've changed … and in many cases, fighting for a bigger piece of a smaller pie," said Tim Ryan, PwC US chair and senior partner, during the call. "And there is a significant amount of time being spent in the C-suite around how do you project revenues and get your share of revenues going forward?"
As they plan strategies to recoup revenue, returning to "business as usual" will look different than expected. Overall, CFOs report high confidence in their companies' return to the workplace abilities while identifying new revenue opportunities is more challenging, PwC said. Specifically, the ability for businesses to return to pre-COVID revenue levels is predicated on how they can adapt and be agile in this new environment.
For example, 63% of respondents anticipate that changes in product and service offerings will be most important to rebuilding or enhancing their revenue streams. Other growth opportunities include changes to pricing strategies (41%), distribution channels (36%), talent (34%), customer segments (34%), deals (31%), new markets (26%), and the supply chain (25%).
Digital transformation has moved to "the forefront of the agenda," Ryan said. Even though many companies were already working on digital initiatives, "this crisis and the virus has really accelerated that."
Digital strategies are not just limited to automating the back office, he said. Companies have also been rapidly changing "their digital strategies on the front end as buying habits have changed, as behaviors are changing, and companies are looking to compete for revenue."
The last trend Ryan said PwC continues to see within the C-suite is an emphasis on employee safety, the employee experiences, and companies trying to keep as many jobs as they can.
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Will the virus spark a second wave?
In addition to worries about when the economy will rebound, 59% of CFOs in this latest survey said they are most worried about a second wave of the coronavirus, said Amity Millhiser, PwC US vice chair and chief clients officer, during the call.
"CFOs right now are preparing their organizations for potential aftershocks," Millhiser said. "More resilient organizations that are able to quickly adapt to the new realities of working and doing business in such a challenging era of both speed and unpredictability of recovery is really first and foremost."
Businesses need to be agile and adapt their existing business models to not only retain existing customers but also identify new ones, she added.
While remote work showed up in the top three concerns of CFOs in previous Pulse surveys, it is not even in the top five in this latest one, Millhiser noted, an indication that "remote work is here to stay."
In all six of the PwC Pulse surveys, CFOs have been asked how long it would take them to bounce back once the coronavirus ends, and not surprisingly, the length of time continues to get longer, she said. In the latest survey, roughly half of the respondents said they would bounce back within three months, and about half said it would take longer than three months, according to Millhiser.
Other survey findings:
● 79% of respondents are considering implementing cost containment
● 36% of respondents are considering adjusting guidance as a result of COVID-19, down 8 percentage points
● 52% of respondents are considering deferring or canceling planned investments as a result of COVID-19, down 6 percentage points
● 26% say in the next month they expect a productivity loss due to lack of remote work capabilities, down 8 percentage points
● 20% say in the next month they expect insufficient staffing to accomplish critical work, up 3 percentage points
● 30% say in the next month they expect a change in staffing due to low/slow demand (temporary furloughs), down 6 percentage points
● 24% say in the next month they expect separation of staff (layoffs), down 7 percentage points
Return to the workplace:
● 80% are very confident they can meet customers' safety expectations, up 6 percentage points
● 73% are very confident they can provide clear response and shut-down protocols if COVID-19 cases in their area rose significantly or if there was a second wave of infections
● 71% are very confident they can provide a safe working environment, up 7 percentage points
● 73% say the current work flexibility will make the company better in the long run (e.g., hours, location), up 5 percentage points
● 72% say the current situation has resulted in better resiliency and agility, which will make the company better in the long run
● 56% say technology investment from the current situation will make the company better in the long run, up 7 percentage points
● 53% say the current situation has resulted in new ways to serve customers, up 9 percentage points
PwC surveyed 330 US CFOs and finance leaders between June 8-11, 2020; 29% of respondents were from Fortune 1000 companies.
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