Uncertainties among corporate treasurers, CFOs and controllers can manifest in many ways. Economic uncertainty may lead businesses to pull back on borrowing. Political uncertainty could lead to more reserved expansion plans. Uncertainty over new technologies may lead companies to stick with their legacy ways.
However uncertainty presents itself within the enterprise, today, there are a lot of anxieties about the global climate. From global corporate debt to the upcoming U.S. presidential election, here is all the data about where businesses are feeling uncertain about their futures — and why.
$75 trillion worth of corporate debt could create major problems for the global markets, says S&P Global Ratings. That debt level could be a reality by 2020, analysts said, up from its current level of $51 trillion. While current market conditions — low interest rates and high credit quality — mean this volume of corporate debt isn’t necessarily a threat, S&P noted that, should conditions change, managing this debt could lead to a sudden departure of lenders from the credit markets and harsher lending conditions. “A worst-case scenario would be a series of major negative surprises sparking a crisis of confidence around the globe,” the report concluded. “These unforeseen events could quickly destabilize the market.”
74% of mid-sized companies’ staff increases will depend on the presidential election, according to Paychex. Last week, the company released new research on how the uncertainty surrounding the outcome of the general election is affecting SMEs. According to the data, these mid-sized firms, with 100–500 employees, say their decision to increase wages will also be affected by the election’s outcome. But for smaller firms, with 20–99 employees, the presidential election isn’t having too much of an impact, with just 42 percent reporting that staffing levels are affected by the election and 48 percent noting wages are similarly impacted. For the smallest companies surveyed, less than 20 percent said their staffing and wage levels are affected by the election. “Any election year brings with it a sense of uncertainty, and many business owners could be hesitant to make decisions affecting the long term during such an ambiguous time,” said Paychex President and CEO Martin Mucci.
55% of SME owners are uncomfortable with cloud technology (except for email), found small business accounting company MYOB. Small business owners reported uncertainties and fears related to data security, with 42 percent of entrepreneurs surveyed citing cyberhacks as their top concern. Unsurprisingly, Gen Y and Gen X small business owners are more likely than their Baby Boomer counterparts to have an online presence for their business. “Whether your technology strategy is progressive or conservative, we’ve seen that small businesses that adapt to changing technologies are much more likely to experience business growth,” MYOB Head of People and Performance Alla Keogh said.
New Zealand businesses wait an average of 35.5 days to get paid, found Dun & Bradstreet for its most recent Trade Payments Analysis report. This marks the sixth quarter in a row in which B2B payment times have remained below 40 days, according to reports, though the Q2 2016 data does suggest payment times are rising. The 35.5-day average is up from 35.2 days in the first quarter of the year and up 0.5 days from the same period a year prior. Still, Dun & Bradstreet New Zealand Managing Director Kevin De Beer told reporters that the data reveals that businesses in the country have remained resilient with their cash flows, and analysts expect this to continue in the medium term, even with the rest of the world’s economic and political uncertainties.
25% of U.S. corporations expect their cash holdings to increase over the next year, and 55 percent said their excess cash is staying inside bank deposits, despite their low-yielding nature. The data, released by the Association for Financial Professionals’ annual Liquidity Survey, noted that these statistics suggest corporations are “ultra-conservative” with their extra monies, even though their cash reserves are piling up. Why? Businesses are risk-averse, analysts said, preferring to let their banks hold their cash instead of riskier investments. Plus, the report added, corporate treasurers are eyeing incoming SEC rules on prime money market funds to come into effect later this year.
1.34% of Canadian SMEs were 30 days delinquent on their bank loans, found PayNet in its analysis of small business borrowing habits. According to the data, its Canadian small business lending index only minutely increased in May from April, and SME delinquency rates are now at their highest since July 2011. “There just isn’t a lot of investment going on by these private companies,” said PayNet President Bill Phelan in a statement, adding that the research hints at stunted GDP expansion for the next few months. Could it be that SMEs are uncertain about their future?