Spending will stay steady this year, say finance chiefs

18 May 2011

18 May 2011 | Angeline Albert

CFOs aim to spend the same in the next 12 months as they did during the past year as they continue to look for efficiencies.

A survey of 665 senior finance executives worldwide found spending in categories such as marketing, IT, professional services, raw materials, transport and logistics, business travel and advertising would continue at the same level as last year.

According to a report, A Taleof Two Recoveries, CFOs on managing for growth produced by CFO Research Services and American Express, only a fifth of UK finance directors will increase spending on production inputs this year. With commodity prices expected to rise during the same period, it suggested spending would be cautious. “Finance executives are reluctant to relinquish the efficiency efforts that served them well through the recent downturn,” it said.

The biggest spending cuts this year, according to 33 per cent of respondents, will be in travel for staff meetings and internal events.

George Montague, vice-president of finance and strategy at UK-based medical equipment producer Medtronic told researchers he is already bringing more scrutiny to bear on travel expenses. This is not only because volume has increased, but also because fuel prices are likely to push airfares up. His approach is “to increase the awareness through information. We’re also looking at our travel policy and seeing if it makes sense to make some modifications to it.”

Useful tactics could include limiting travel for internal meetings or reducing the number of travellers who attend a particular event. “It’s a matter of ensuring that our travel is cost-effective,” Montague said, rather than simply cutting back.

"Finance executives are maintaining discipline and carefully weighing each investment. Companies are looking closely at the justification for spending, laying the foundation for more sustainable expansion," said Janey Whiteside senior vice-president at American Express.

The survey was conducted in April and is the fourth annual study of global business spending.

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