New Deloitte report finds 98% of UK CFOs are expecting a rise in operating costs
A new report from Deloitte has revealed that a record number of senior finance leaders (98%) are anticipating a rise in operating costs in the year ahead. This comes amidst the cost of living crisis, which has seen inflation rise to record levels.
In addition to a record number of finance leaders (98%) anticipating operating costs to rise, the report found 46% expected a significant rise. Chief Financial Officers (CFOs) also reported a record level of risk driven by geopolitics and inflation.
Over a quarter of CFOs reported significant or severe levels of supply chain disruption in Q1, whilst 71% also believe operating margins will fall over the next 12 months, compared to 44% in Q1.
David Brown, Founder and Chief Executive of Hi, believes that, given the current economic uncertainty and geopolitical risk, it’s no surprise to see finance leaders anticipating a rise of costs.
He comments: “Given the economic uncertainty and heightened geopolitical risk, it’s no surprise to see a record number of senior finance leaders (98%) anticipating a rise in operating costs in the year ahead. As a result, we can expect to see more businesses looking for financial levers to free up working capital so they can continue to support their employees, introduce new products, and enter new markets.
“In times of need, many businesses turn to the likes of supply chain finance or extend their payment terms to suppliers to free up capital, ignoring their largest expense: payroll. New technology enables firms to extend their salary payments by 8-12 weeks, boosting working capital, reducing the need for borrowing and releasing pressure on cashflows.
“As costs continue to grow and economic growth stagnates, businesses need to get creative in order to preserve their working capital and cashflow so they can continue to invest, grow and, importantly, build resilience.”