The top priorities for finance leaders in 2021

09 March 2021 Consulting.us 5 min. read
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Finance leaders are ready for a strong economic recovery in 2021 – with digital, social and procurement taking center stage. This is according to a new Proxima survey conducted among finance leaders.

More than 1,000 chief financial officers and finance directors across the US and the UK took part in Proxima’s survey, which ran through January and February. The procurement-specialist consulting firm sought an overview of how finance leaders are approaching 2021.

The overriding sentiment is optimism. In the US, the Biden administration’s proactive approach to Covid-19 has put wind in the sails of the economy, and nearly 70% of finance leaders expect these policies to have a positive impact – including 15% that expect it to be extremely positive.

Economic outlook for 2021

Helping things along are the new administration’s vibrant long-term trade policies. On the back of Brexit-related trade opportunities and a rapid vaccination rollout, most finance leaders in the UK are also entering 2021 with a sunny economic outlook.

The direct upshot of this scenario is an increase in investment. Businesses are shedding the tentative mindset that was so critical to managing the volatility last year, with over 80% of finance leaders in the US planning to make "significant financial investments" this year. A similar charge is being planned in the UK.

Finance leaders expect growth and investment

Fueling this expansion is business recovery and growth. A staggering 90% of businesses across both markets expect to grow financially over the course of 2021, which will free up the capital for strategic investments. Indeed, top strategic priorities for finance leaders this year include expansion into new markets and a wider product or service offering.

That said, much of the investment agenda is still reflective of pandemic-induced realities. Most finance leaders, for instance, are prioritizing cash flow injections and cost reduction, signaling a sustained focus on business survival.

Another example is digital transformation, which rapidly climbed the corporate agenda last year for several reasons. One is the cost benefit that comes with tech-driven business efficiency – a useful tool in a cash-constrained economy. Then there is the anticipated competitiveness of the post-pandemic world, where seamless digital offerings are expected to win out among an increasingly demanding consumer base.

Strategies for business resilience in the next 12 months

Lastly, as pointed out by Ed Winterschladen, Proxima EVP for Europe, “The pandemic has flipped working habits on their head and huge swathes of the population have been forced to adopt remote working. For businesses, this means increased need for IT infrastructure, and IT has therefore risen sharply on the finance leader’s agenda.“

Indeed, half of finance leaders on average across the US and the UK expect some iteration of remote working to become a permanent fixture – be it a complete transition or a hybrid arrangement. This, combined with the fact that hiring is also on the agenda for more than two-thirds of business leaders this year, is enough to merit a boost in IT investments. 

Finance leaders top budget priorities for 2021

Other central investment areas across both economies include capital, sales, production and marketing – as businesses look to kick off in the new normal. One trend emerging at the core of the post-pandemic economy is a focus on delivering more social value.

“Increased public scrutiny of corporate social value policies over the past year and a growing sense of corporate altruism brought on by the pandemic, mean that social value has quickly become an issue firmly on the finance leader’s agenda,” noted Winterschladen.

Focus on social value

Environmental, social, and corporate governance (ESG) considerations such as sustainability, ethics, humanitarian factors, diversity, and inclusion were all on the radar before the pandemic, but have now emerged as cornerstones of the post-Covid business environment. 

The value of procurement

Charging into this new normal, finance leaders in the US, the UK and globally have a lot on their plate. This is in addition to the residual challenges of a crisis-stricken economy. Per the Proixma report, a stabilizing force through this turbulent time has been procurement.

The value of procurement

“As the pandemic ripped through the global economy in March last year, all businesses looked to restructure their cost base and implement some form of cost-cutting measures. Finance leaders on both sides of the Atlantic indicate that the procurement function played an important role in overcoming Covid-related challenges,” explained the researchers.

Now, as businesses repivot towards fresh economic conditions, procurement occupies a similarly central position for most finance leaders. For them, a strategic approach to procurement can help save costs, build sustainability, deliver social value, enable innovation, manage risks, and build overall business resilience.

In short, procurement is the strong foundation that can support a flurry of flexible, agile, and socially responsible expansion across the business environment – a key driving force for a global economic recovery.