Nearly half of CFOs said they will start allowing on-site work as soon as governments allow it, but about 45% said their efforts to work on-site will be limited by the expectation of a fall resurgence of the virus, according to a new report on CFOs’ assessments of the economy in the second quarter by Deloitte.

The findings indicate that many management teams remain focused more on ensuring viability and adapting for near-term performance than on evolving their company for success post-crisis, Deloitte said. Still, teams’ focus varies greatly by industry, and many appear to be putting in substantial work on survival, adaptation, and evolution at the same time, the firm noted.

Three-fourths of respondents to the CFO Signals Q2 report said they believe their company can sufficiently manage the risks of on-site work for substantial parts of their business—and they mostly do not expect to provide hazard pay to make it happen, the report said. Still, about 70% said that those who can continue to work remotely will have the option of doing so.

However, when it comes to achieving near-normal levels of on-site work, 52% said effective on-site testing is necessary, with effective treatments and vaccines less so at 35% each, the survey said. Thirty-six percent cited dependence on the reopening of school and daycare facilities.

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Overall, however, 60% of CFOs do not expect to return to a pre-crisis level of operations in 2020. Instead, 21% expect to reach this milestone in Q1 2021, with 39% saying the second quarter or later. Accordingly, growth expectations for revenue, earnings, capital spending, and hiring have fallen to by far their lowest levels in the survey’s 10-year history, Deloitte said.

“The pandemic’s fallout has been both severe and widespread, resulting in a dramatic drop in CFOs’ perceptions of global economic activity,” said Sanford Cockrell III, national managing partner of the US chief financial officer program at Deloitte. “This quarter, only 1% of CFOs rated current conditions as good in North America, compared to 80% last quarter.”

As CFOs look to a post-crisis future, many said they expect substantially higher levels of automation and cloud computing, and they overwhelmingly expect more remote work, including within their finance teams, the survey said. Accordingly, many also expect a smaller real estate footprint.

“CFOs are cautiously optimistic about reopening, as they work to navigate the future with a remote workforce, and an eye on returning to near normal operational levels in early- to mid-2021,” Cockrell said.

Cross-border sourcing is something most are not anticipating, although many said they do expect more diversified supply chains, and they express mixed concern about credit and currency markets, according to the report.

As governments are now beginning to loosen restrictions, CFOs and their teams are making difficult choices about what actions to take and when, Deloitte said.

Other key takeaways
·         Assessments of the North American and European economies fell to historic lows; however, many believe conditions will be better in a year.
·         Executive teams are primarily focused on responding by maximizing performance during the crisis and preparing to thrive by evolving business models and making fundamental business strategy shifts for the post-crisis future.
·         CFOs cite historic lows for expected revenue and earnings growth, with domestic hiring growth also falling sharply.
·         In a year, 75% of CFOs expect more of their workforce to work remotely and nearly half expect a smaller real estate footprint.
 
Global economic perceptions have dropped to all-time lows
Perceptions of North America fell drastically, with just 1% of CFOs rating current conditions as good (80% last quarter), but 58% expecting better conditions in a year (up from 35% last quarter).

Europe’s numbers were also down sharply, coming in at 1% and 33%. Perceptions of China’s current conditions fell slightly to 9%, and expectations for a year from now rose sharply to 51%.

The survey included responses from Deloitte’s client CFOs across the US, Canada, and Mexico. The vast majority are from companies with more than $1 billion in annual revenue, Deloitte said.

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