PwC’s COVID-19 CFO Pulse Survey

US/Mexico findings — March 30, 2020

PwC is closely tracking sentiment and priorities for finance leaders, as businesses respond to unprecedented disruptions to daily operations and finance activities brought on by the coronavirus. This survey, the second since emergency public health measures were first put in place in North America, reflects the views of 55 finance leaders from a cross-section of industries in the US and Mexico during the week of March 23.  For views of finance executives around the globe, see the multi-territory report covering the same period.

How finance leaders are responding to the coronavirus crisis

Finance chiefs are broadening cost-reduction measures and looking to shift supply chain strategies as a growing majority fear a significant impact on their business from COVID-19 (coronavirus), according to PwC’s latest survey.

The findings show that businesses are prioritizing cash spending, while assessing options for financing and/or deeper pullbacks as they look forward toward a recovery time frame. 

Top findings

  • 67% of finance leaders surveyed have already taken steps to contain costs as a result of COVID-19.

  •  64% are considering the need for taking further actions on costs or investments.

  •  76% of respondents expect that their business would be back to normal within three months if COVID-19 were to end immediately. This is down from 90% two weeks ago. The realization that the effects of the outbreak aren’t going away quickly is settling in.

What is your company's current level of concern related to COVID-19?

March 11, 2020
March 25, 2020
Potential for significant impact to our business operations, and it is causing us great concern
0 %
0 %
Limited to specific regions in our business currently, but we are monitoring closely
0 %
0 %
An isolated challenge; not greatly impacting our business currently, but we are monitoring the situation for any change
0 %
0 %
Source: PwC COVID-19 US/Mexico CFO Pulse Survey
March 11, 2020: base of 50; March 25, 2020: base of 55

Eighty percent of finance leaders now say they expect a decrease in revenue or profit for the full year. Two weeks ago, only 58% anticipated decreased revenue and/or profits in 2020, and 40% said it was difficult to assess.

What impact do you expect on your company's revenue and/or profits this year as a result of COVID-19?

March 11, 2020
March 25, 2020
%
%
%
%
%
%
%
%
Decrease revenue and/or profits
We do not expect any impact to revenue and/or profits
It is difficult to assess at this point
Increase revenue and/or profits
Source: PwC COVID-19 US/Mexico CFO Pulse Survey
March 11, 2020: base of 50; March 25, 2020: base of 55

While visibility into the effects of the virus are improving, uncertainties are rising. Worries over the financial impacts of COVID-19, including on liquidity and capital resources, are cited by 64% of finance leaders, compared with 48% in the survey taken the week of March 9. The potential for the outbreak to lead to a global economic downturn remains the top concern.

What are your top three concerns with respect to COVID-19?

March 11, 2020
March 25, 2020
Potential global recession
%
%
Financial impact, including effects on results of operations, future periods, and liquidity and capital resources
%
%
Decrease in consumer confidence, reducing consumption
%
%
Supply chain issues
%
%
The effects on our workforce/reduction in productivity
%
%
Difficulties with funding
%
%
Not having enough information to make good decisions
%
%
Impacts on tax, trade or immigration
%
%
Lack of a comprehensive/tested company emergency preparedness plan
%
%
Source: PwC COVID-19 US/Mexico CFO Pulse Survey
March 11, 2020: base of 50; March 25, 2020: base of 55

Implications

Cash flow scrutiny will be critical in the days and months ahead, as will the speed at which the $2 trillion economic stabilization package starts to flow through the economy. Managing cash pressures often falls directly on finance departments during a crisis. Executives will balance this against the prospects for relief as details continue to unfold about the package’s significant tax provisions and other measures to assist individuals and businesses. 

In our latest survey, 76% told us they expect that their business would be back to normal within three months if COVID-19 were to end immediately. However this is down from 90% during the week of March 9. The realization that the effects of COVID-19 aren’t going away quickly is settling in. It is important to note that respondents were surveyed before the US Labor Department reported a record 3.28 million jobless claims for the week ending March 21.

If COVID-19 were to end today, how long would you estimate it would take for your company to get back to business as usual?

March 11, 2020
March 25, 2020
%
%
%
%
%
%
%
%
%
%
Less than a month
1 to 3 months
3 to 6 months
6 to 12 months
More than 12 months
Source: PwC COVID-19 US/Mexico CFO Pulse Survey
March 11, 2020: base of 50; March 25, 2020: base of 55

Much will also depend on the ability of the workforce to recover at pace. Findings make clear that employees, as well as employers, are experiencing multiple challenges as a result of shelter-in-place measures, which are affecting millions of people and raising the complexities involved in getting back to normal. Strain on the workforce is creating a greater need for support and benefits, as employees are suffering.

When asked about expectations for the next month, 25% of finance leaders expect to face insufficient staffing, resulting in an inability to get critical work done. Businesses are experiencing capacity constraints due to COVID-19 disruptions, along with growing customer and employee demands for services and expertise, such as call center or technology support.

Some 60% say productivity is dipping due to a lack of remote work capabilities. This isn’t surprising. Companies and employees are dealing with a range of challenges in the shift to remote working — from technical issues like broadband access to personal and family well-being. In addition, 44% expect furloughs, and 16% expect layoffs. Separation of the workforce, or layoffs, is typically considered a last resort.

As a result of COVID-19, which of the following does your company expect to occur in the next month? (Select all that apply).

Productivity loss due to the lack of remote work capabilities
%
Higher demand for employee protections (such as sick leave policies)
%
A change in staffing due to low/slow demand (temporary furloughs)
%
Insufficient staffing to accomplish critical work (workforce capacity)
%
Separation of staff (layoffs)
%
Other (please specify)
%
Source: PwC COVID-19 US/Mexico CFO Pulse Survey
March 25, 2020: base of 55

The impact of the outbreak on mergers and acquisitions (M&A) strategies is divided and remains unclear at the moment. A majority of finance leaders surveyed are still assessing whether or not to change their approach. However, 13% report an increasing appetite for M&A, indicating that some leaders are looking to the future and evaluating businesses and assets that have healthy underlying operations and are now affordable.

How is COVID-19 affecting your M&A strategy?

Source: PwC COVID-19 US/Mexico CFO Pulse Survey
March 25, 2020: base of 55

Learnings from crisis likely to accelerate supply chain shifts

At the same time, more leaders are starting to look outward to assess impacts of COVID-19’s global developments on their supply chain. As the crisis evolves, complexities and vulnerabilities in global supply chains, which extend beyond China’s central role in manufacturing and goods trade, are coming to the fore. For example, as China’s production ramped up in March, the outbreak spread to regions that are integral to outsourced technology and business process services, such as India, which told most of its 1.3 billion people to stay indoors for three weeks starting March 25.

While it’s too soon to say whether large-scale sustained adjustments will be made, given the extreme labor cost arbitrage, the change in sentiment caused by COVID-19 is striking and worth watching. When asked whether they are considering changing the breadth of their supply chain as a result of the virus, the percentage of respondents who say they don’t expect to make any changes dropped from 52% to 31%. US businesses have had to contend with a number of supply disruptions in the past three years, including escalations in US-China tariffs and a spate of natural disasters. This crisis may be a tipping point for what’s likely going to be a strategic shift in where supply is sourced and products are assembled.

Relationships with suppliers and scenario planning capabilities have been put to the test during the crisis. Companies should now be planning for recovery, while also taking time to remodel their supply chains in light of new risk and competitive performance dimensions. This was already under way, as some US companies diversify their Asia operating models in response to shifting trade policies and begin to build workflow automations.

As a result of COVID-19, are you considering changing the breadth of your supply chain (e.g., vendors, facilities, markets)?

March 11, 2020
March 25, 2020
%
%
%
%
%
%
No
Not sure
Yes
Source: PwC COVID-19 US/Mexico CFO Pulse Survey
March 11, 2020: base of 50; March 25, 2020: base of 55

Deeper look at financial actions

The survey results suggest many businesses are not sticking with budgets that were put in place before the crisis. When asked about actions already taken, 67% of survey respondents say they’ve already implemented cost containment. These typically include stopping discretionary spending, such as travel and expenses, though 58% report they deferred or cancelled planned investments.

When asked what actions they’re considering going forward (shown below), an increasing number of respondents are evaluating additional steps to conserve cash. For example, 64% of leaders are now considering canceling or delaying planned investments, up from 32% during the week of March 9. Facilities and/or IT are the most likely areas targeted for deferrals or cancellations. 

These findings indicate that cash management priorities are exerting operational pressure across a broad range of companies — not just in businesses with short cash runways or those in industries, such as transport and hospitality, where demand has evaporated because of shelter-in-place ordinances.

Which of the following financial actions is your company considering as a result of COVID-19? (Select all that apply).

March 11, 2020
March 25, 2020
Implementing cost containment
%
%
Deferring or canceling planned investments
%
%
Adjusting guidance
%
%
Changing company financing plans
%
%
Changing M&A strategy
%
%
Other
%
%
We are not considering any financial actions as a result of COVID-19
%
%
Source: PwC COVID-19 US/Mexico CFO Pulse Survey
March 11, 2020: base of 50; March 25, 2020: base of 55

Outlook for guidance and disclosures

We expect more companies to explore different scenarios regarding the duration of the outbreak and to assess the range of potential impacts on their financial performance. Close to half (49%) say they are considering adjusting guidance. Separately, when asked about plans to change disclosures, 68% say they’re planning changes as a result of COVID-19, up from 48% during the week of March 9. It is worth noting that 24% of the surveyed CFOs believe it’s currently too difficult to assess what changes, if any, will need to be made to disclosures.

To what extent do you plan on changing your disclosures as a result of COVID-19?

March 11, 2020
March 25, 2020
%
%
%
%
%
%
%
%
Not at all
Difficult to assess currently
Somewhat
Significantly
Source: PwC COVID-19 US/Mexico CFO Pulse Survey
March 11, 2020: base of 50; March 25, 2020: base of 55

Looking ahead

These findings underscore the reality that companies’ pre-crisis targets have been overtaken by events. PwC believes the goal for the leaders of most large companies should be to address the threat of the financial fallout caused by widespread unemployment. This will mean working with boards, other leaders and investors to pivot, recalibrate and, wherever possible, to adopt a longer-view perspective. 

As the crisis unfolds, we will continue to regularly track leadership’s efforts to do that in future installments of PwC’s COVID-19 CFO Pulse Survey.

About the survey

To help identify the business and economic impact of COVID-19, PwC is conducting a biweekly survey of finance leaders in the US and Mexico, as well as other territories. Of the 55 surveyed in the US and Mexico during the week of March 23, 2020, 80% are based in Fortune 1000 companies, with others in healthcare, nonprofit associations or privately held companies. The next set of results will be released on April 13, 2020. Sign up to receive regular survey updates.

Contact us

Tim Ryan

Tim Ryan

US Chair and Senior Partner, PwC US

Amity Millhiser

Amity Millhiser

Vice Chair and Chief Clients Officer, PwC US

Neil Dhar

Neil Dhar

Financial Services Industry Leader, PwC US

Kristin Rivera

Kristin Rivera

Partner, Global Forensics Leader, Global Crisis Consulting Leader, PwC US