Deeper cost cutting top priority for CFOs

20 July 2009

21 July 2009 | Jake Kanter

Companies are planning deeper rounds of cost-cutting in an effort to make longer-term savings, a study by KPMG has found.

The survey of 241 senior finance executives reported 86 per cent want to make cuts that will benefit their company in 12 months' time.

Most are looking for further reductions of up to 25 per cent over the next two years, having already completed the "easy bit" by curbing discretionary spend.

It backs up a survey earlier this year, which found the majority of 400 CPOs had prioritised the hunt for new savings after coming under greater pressure to reduce costs (Web news, 3 April).

"The next 24 months will see organisations stepping up their focus to deliver further cuts to the cost base to create a sustainable advantage," said Jeremy Kay, partner in KPMG's European Operations Strategy Group.

"This requires a bolder, longer-term commitment to a lifestyle change, not merely a short-term diet, as old habits can easily creep back in."

Over a quarter of the respondents said they would restructure the organisation and make redundancies. A further 20 per cent said they would improve internal processes, while 10 per cent suggested that better risk management would be important to making savings.

The study also found more could be done to encourage staff to contribute to cost savings, with just 5 per cent of the CFOs saying all employees are responsible for cost management plans.

SMjul2009

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