UK businesses express optimism for 2024 backed by recent research findings.
- The CFO’s Playbook reveals 50% of UK enterprises foresee an easier 2024.
- A decrease in inflation concerns allows firms to aim for ambitious goals.
- However, financial health and spend management remain critical hurdles.
- Businesses are considering various strategies, including cost consolidation.
Recent research indicates a notable shift in sentiment among UK businesses, with half of the participants anticipating a more favorable economic environment in 2024 compared to 2023. This optimism is derived from findings by the CFO’s Playbook, which surveyed over 500 financial decision-makers. While 35% predict a tougher year, 15% expect conditions to remain unchanged.
As inflation concerns decrease by 20%, companies are emboldened to pursue more ambitious objectives, with nearly three-quarters prioritizing cash growth. This ambition sees a remarkable 163% increase from the previous year. The focus on improving efficiencies has also surged, with 55% of businesses recognizing it as a primary goal, compared to 24% the preceding year. Furthermore, the target of company stabilization has shifted towards growing talent, now a priority for 38% of enterprises, up from 22%.
Despite the positive outlook, businesses face significant challenges in managing financial health and spend visibility. A striking revelation shows that one in four companies intends to reduce spending, yet merely a third claim to possess an excellent command over their expenditure. The situation is exacerbated for organizations with 250-499 employees, where only 13% report adequate control over financial health.
The confusion between expenses and spend management further complicates these challenges. Almost half of the firms perceive expenses and spending as distinct categories, yet only 24% have clear guidelines for differentiating them. Consequently, finance teams often leave spending management to chance, with more than half of companies not tracking expenditures below £10,000 accurately.
Thorbjørn Fink, COO of Pleo, emphasizes the need for comprehensive oversight of business outgoings to reach revenue and savings goals. He warns that overlooking low-cost expenses could lead CFOs to miss crucial aspects of spend management, as ignoring these elements provides only a partial view of financial activities.
Cost consolidation could have considerable implications for workers, as businesses aim for deeper insights and minimal spend duplications. While 21% of firms are investing in renewable energy to reduce the primary threat of energy bills, there is a notable trend towards reviewing employee salaries. For instance, a fifth of businesses are contemplating pay reductions for remote workers, potentially affecting 16% of the workforce. Simultaneously, 41% of companies are reverting to traditional office settings, driven by industry trends and performance insights.
Despite these measures, workforce stability appears promising. Only 25% of businesses foresee the need for staff reductions in 2024, a significant improvement from the previous year’s 42%. Encouragingly, there is a 27% increase in the likelihood of hiring, illustrating a more optimistic employment landscape.
UK businesses are poised for a potentially prosperous year, yet the need for strategic financial management remains paramount.
