Despite the current bleak financial outlook, companies are finding ways to watch expenses and invest in growth, according to a report issued by the American Express/CFO Research Global Business and Spending monitor.
The American Express report indicator shows that companies are actively searching ways to pursue growth while maintaining efficient spending practice. "While it is hard to deny the uncertainty in today's economic climate, companies around the world are looking for ways to maintain their growth momentum," said Andrew Pilkington, vice-president and general manager of global commercial card and merchant services Canada at American Express.
Companies have learned from previous downturns that excessive cuts
can be counterproductive in the long run. Of the 370 companies surveyed, 38% of them admitted that they should have invested more to improve production efficiencies while 42% felt that resources should have been allocated to improve administrative efficiency in the recession of 2001.
In sharp contrast to the current view, 57% of companies polled said that they plan on investing in improving production efficiency in the near future.
Travel has also come under greater scrutiny as firms look for ways to get more out of their travel dollar. "Companies are looking to strike a delicate balance between maintaining momentum to be competitively positioned for economic recovery and being as efficient as possible in managing travel expenses," said Lyell Farquharson, vice-president and general manager of Business Travel Canada at American Express. Seventy-five per cent of firms polled said that domestic travel would stay the same or increase over the next 12 months.
High energy prices were on the minds of companies looking to cut costs as 42% of respondents cited the energy costs as a prime concern.
The American Express/CFO Research Global Business & Spending Monitor surveyed 370 senior finance executives at large and global companies across many industries. The survey explores companies' investment priorities and spending plans over the next 12 months, as well as how their strategic priorities have shifted in light of the current economic environment.
By Steve Stecyk and edited by Nancy Girgis