W&F Q1

Nov22526 Q1 2024 Wealth & Finance Jul23111 Half of UK businesses expect 2024 to be easier than 2023 - but financial blind spots remain UK businesses are hopeful for 2024 according to new research from Pleo - one of Europe’s leading spend management platforms. The CFO’s Playbook for 2024, which polled over +500 UK financial decision makers, found that almost 50% of UK businesses believe 2024 will be “easier” than 2023 (vs. 35% believing it will be harder and 15% anticipating that it will be the same as last year). As such, with a waning concern around inflation - a 20% decrease since 2023 - businesses are targeting more ambitious goals. Nearly three quarters are prioritising cash growth, and while this was also the primary objective of businesses last year, findings show a 163% increase in British businesses focussed on this ambition. Other targets last year included ‘improve efficiencies’ (24%), which has become an increased priority in 2024 - with over half of businesses (55%) reporting it as a key ambition - and ‘stabilise the company’ (22%), which has been replaced by ‘grow talent’ (38%) in 2024. Financial health and spend visibility stand in the way of business growth With so many businesses focusing on cash growth this year, 1 in 4 UK businesses are looking to reduce spending. It is interesting to note that while businesses are keen to address a decrease in spend, only a third feel they have an excellent grip on managing it. A compounding impact is that just 28% feel they have a firm grasp on their financial health and performance, falling to just 13% for those businesses with 250-499 employees. One factor playing a significant role in this lack of visibility and confidence in spend management is the way many define expenses. Almost half (47%) of UK businesses believe that expenses and spend are different, but only 24% have clear guidelines for their finance teams on how they differ. As a result, finance teams are currently leaving what is and isn’t recorded in terms of business spending to chance. In fact, findings show that more than half of UK businesses admit to not accurately tracking items into their spend management strategy until they exceed £10,000. Thorbjørn Fink, COO of Pleo says: “For businesses to meet their revenue growth and saving goals of 2024, they need to ensure they have full visibility and insights into all outgoings. When there is real pressure on financial growth, companies can no longer afford to silo their outgoings into expenses (e.g. low-cost items such as coffees, lunches, subscriptions) and spend (e.g. LinkedIn ads, business travel, office rent). Choosing to ignore low-cost items means CFOs are needlessly putting blinkers on and, in the process, only getting half of the spend management picture.” Consolidating costs may hit workers hard Keeping a tighter rein on spending means deeper insights and fewer spend duplications. But it also reduces the need for radical strategies to cut costs. While 21% of businesses are investing in renewable energy to reduce energy bills - the primary threat (24%) to businesses in 2024 - a significant proportion are reviewing salaries. For instance, the research revealed that 1 in 5 UK businesses are considering reducing pay for remote workers - a decision that can potentially hit 16% of the UK workforce. Additionally, 41% of businesses are hauling employees back to the office, with the most common reason behind this being “other companies are doing the same” (30%), followed by using performance-based insights and staff feedback (both 29%). Despite this, staff numbers will remain buoyant in 2024. Only a quarter (25%) believe they will have to let staff go in 2024 - improving significantly from last year, where 42% of businesses were making staff cuts - while the data notes a 27% increase in the viability of hiring. • Almost 50% of UK businesses believe this year will be easier than 2023 • 71% of UK companies to prioritise revenue growth (up from 27% in 2023), yet concerns about running costs and visibility of financial performance remain • 1 in 4 SMEs to reduce spending, with 1 in 5 looking to reduce remote employee wages to reach goals

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