- 80% of UK CFOs say they’re not fully prepared to manage the impact of the risk on their business caused by a decrease in sales volumes
- 62% say a drop in sales volumes is their biggest worry in a post-Covid world compared to 40% pre-lockdown
- 84% surveyed say they now experience payment delays at least once a month, highlighting the strain British businesses are under
LONDON, 20 AUGUST 2020 – Eight in 10 chief financial officers fear their businesses are ill prepared to handle a decrease in sales volumes as the full impact of Covid-19 begins to be felt on the UK economy, according to research from Euler Hermes.
The findings come from its The Finance Leader of Tomorrow survey, which profiles European finance directors’ sentiments and priorities before and after the impacts of lockdowns were felt, as countries found themselves in the middle of the grip of Covid-19. The surveys were carried out in February and at the end of May, offering a view from CFOs both before and during Europe’s lockdowns.
Four in five (80%) of those surveyed in the UK said they’re not fully prepared to manage the impact of the decrease in sales volumes which is expected to kick in during the coming months. Demand is set to remain at historic lows as government support measures are eased, cashflow positions weaken and the impact of Brexit climb up the business agenda.
In a reflection of the parlous state of the economy, UK CFOs report that a decrease in sales volumes is now their biggest worry, up to 62% from its pre-lockdown level of 40%.
Meanwhile, 84% say they now experience payment delays for goods or services at least once a month, laying bare the pressure Covid-19 has put on supply chains and trading relationships.
Steve Scott, Chief Financial Officer, Euler Hermes UK and Ireland, said: “The UK’s chief financial officers are in the eye of the storm, battling challenges they’ve never had to grapple with before and probably never expected to face. Our survey shows a big majority of CFOs – those charged with making their businesses as financially resilient as possible – worry about the ability of their firms to make it through the current crisis.
It’s easy to forget the optimism that greeted the year as the UK welcomed a calmer political outlook and a more stable economy. We’re now in a different world with a new set of challenges and opportunities. Slowing demand and falling sales volumes pose very real threats to firms’ finances. The past few months highlight the importance of maintaining strong relationships with stakeholders and keeping a close eye on signs of pressure to the top and bottom lines.”
Confidence among European CFOs has dipped markedly as the pandemic played out. At the beginning of 2020, financial leaders expected better financial performance despite issues such as high political risk, rising protectionism and climate change.
In May, just 36% felt confident about 2020 compared to 50% in February. In February 69% expected turnover to improve this year, compared to just 52% at the end of May. Meanwhile, those reporting being "worried" have almost doubled from 19% to 32%. The number of CFOs saying they are "scared" has more than doubled from 9% to 23%.
More than 1,000 CFOs participated in the survey, which was carried out in February and May to test pre and post-Covid-19 lockdown impacts in four markets - France, Germany, Italy and the UK.