IGTA Journal - Summer 2020

treasurers.org/thetreasurer August/September 2020 09 CONSERVE CASH, MANAGE DEBT DOWN SURVEYS AND REPORTS CFOs OF MULTINATIONAL CORPORATES EXPECT HEAVY IMPACTS ON THEIR BUSINESSES AND ARE SHORING UP THEIR BALANCE SHEETS, ACCORDING TO DELOITTE’S CFO SURVEY CFOs of multinational businesses have demonstrated record lows in con dence in the face of COVID-19 impacts. They expect revenues to fall by 22% this year, compared to their pre-COVID-19 projections, and expect recovery to be slow. Businesses have pivoted sharply from growth plans to defensive strategies with an unprecedented focus on cost control, cash conservation and debt reduction. Finance strategies are defensive. 76% are focused on reducing costs, compared to 50% in Q4 2019 68% have increasing cash ow in their sights, compared to 45% in Q4 2019 41% are looking to reduce leverage, compared to 19% in Q4 2019 17% are disposing of assets, compared to 13% in Q4 2019 Businesses’ responses continue the pattern seen in the early days of the onset of COVID-19, including encouraging levels of support for suppliers and customers. 99% have introduced or expanded exible working arrangements, such as remote working, shifts, etc 59% are furloughing employees 52% are reducing output 33% are diversifying suppliers 29% are o ering payment holidays to customers 23% are o ering credit to suppliers 22 % A majority expect demand to pick up in Q3 and Q4 ( 40% and 33% respectively) 2020. However, 23% don’t expect to see recovery in demand until next year. More than a half ( 53% ) do not expect to see a return to pre-pandemic levels of demand until the second half of 2021 at the earliest. 2021 52% of CFOs expect a long-term increase in corporate debt levels. Other long-term impacts they predict include: 98% – a continuation of exible and home working 97% – pandemic planning within businesses 94% – increases in levels of corporate/household taxation 89% – greater diversi cation and strengthening in supply chains IGTA eJournal | Summer 2020 | 34