In a notable shift, CFOs, typically among the least optimistic of the C-Suite, have shown a significant uptick in confidence regarding the business landscape in 2024. According to the most recent CFO Confidence Index, the percentage of CFOs anticipating an improvement in business conditions over the next year surged from 38 percent in Q4 to 46 percent in Q1—the highest level since mid-2021. The latest data reveals a notable increase in optimism, with CFOs rating their outlook for business conditions at 6.8 out of 10, up from 6.1 in Q4. This positive outlook is attributed to expectations of a gradual reduction in inflationary pressures throughout the year, leading to anticipated declines in interest rates and subsequent boosts in investments and business spending.
Amidst the uncertainty surrounding the presidential election in the fall, CFOs expressed optimism that a year from now, once the outcome is determined, there will be increased stability. This anticipated stability is expected to serve as a catalyst for further growth.
“We believe business will be good [one year from now], but it will definitely depend on the election outcome and decisions made as a result for 2025,” said Michael Jackson, CFO of Radius Global Market Research. Still, he said, “We expect 2024 will be strong.”
CFOs are not alone in their improved optimistic outlook within the C-Suite this year. The Confidence Index series reveals that every other surveyed group—CEOs, CHROs (Chief Human Resources Officers), and Board Members—has also shown heightened optimism for the next 12 months.
Chief Executive's February polling of CEOs showcased a strong confidence in the expected rate cuts, with 44 percent anticipating economic improvement over the next year.
Similarly, Corporate Board Member's February survey revealed that only 28 percent of public company board members expect conditions to worsen in the next 12 months—a record low. Instead, 72 percent anticipate conditions to either improve or remain stable.
CHROs have also exhibited increased confidence, rating future conditions at 6.8 out of 10, aligning with CFOs' outlook in Q1. Notably, a higher proportion of CHROs foresee conditions remaining the same rather than improving, likely due to ongoing labor market challenges.
When asked about their company's forecasts, 74 percent of CFOs anticipate profit increases in the next 12 months, marking a notable rise from the 61 percent reported in Q4 of 2023 and reaching the highest level since 2021.
Delving deeper, 42 percent anticipate profit increases of less than 10 percent, while 32 percent expect a more robust increase of at least 10 percent.
Additionally, the proportion of CFOs projecting revenue increases has also risen by 4 percent this quarter, reaching 80 percent compared to 77 percent in Q4 of last year.
The proportion of CFOs planning to expand their company's workforce in the coming months has surged to its highest level since May 2023, reaching 58 percent.
Similarly, the percentage of CFOs intending to boost capital expenditures (capex) has also climbed to a near-term peak, rising to 45 percent according to the March data—a remarkable 13 percentage point increase from the previous quarter. One CFO surveyed anticipates ongoing business investments as the economy picks up momentum, yet stressed the importance of vigilant cost control and return on investment (ROI) considerations in the foreseeable future.
Michael Polaha, Senior Solutions Leader at financial automation provider BlackLine and a partner in the CFO Confidence Index, agrees as well. He notes a marked acceleration in companies' engagement and decision-making processes, signaling a return to a growth-oriented mindset among CFOs. However, despite growing confidence in their operating environments, Polaha suggests that CFOs will remain prudent in their spending habits. While they may reinvest in capex, they will maintain a focus on maximizing ROI and adopting capabilities that position their organizations for scalable growth amidst potential future volatility.
Regarding debt and cash positions, 26 percent of respondents indicated they anticipate increasing debt (compared to 27 percent in Q4), while 56 percent intend to bolster their cash reserves (a notable uptick from 47 percent in Q4).
If you are a business owner or CEO within the San Francisco Bay Area or Silicon Valley, in need of an experienced fractional or outsourced CFO to help your company control costs, increase profit margins, improve cash flow as well as identify strategic growth opportunities, our highly skilled outsourced CFO services provide direct access to high-quality expertise in a cost-effective manner.