More Finance Cuts Ahead

While last year was tough for U.S. companies, the pressure for cost cuts seems likely to continue this year. New research from Hackett shows that although finance organizations expect to see revenue grow 4% in 2010, they are planning additional reductions in both finance budgets and payrolls.

Sean Kracklauer, president of Atlanta-based Hackett, a strategic consultancy, says that companies' revenues fell an average 15% last year and most weren't able to cut their costs quickly enough to match the slide. As a result, "they're trying to catch up" this year, Kracklauer says.

Hackett's survey found that companies plan to cut finance staffing by 1.9% this year, following cuts of 4.6% last year, and intend to trim finance budgets by 2.4%, following cuts of 4.7% in 2009.

Executives also say they're doing their best to maintain the lower levels of spending and staffing they have established during the recession. They regard 61% of the cuts in finance staffing as permanent, as well as 54% of the reductions in finance budgets. "Some of the head count changes are going to come back, but when they bring them back, it will probably be in different markets," Kracklauer says.

Hackett's 2010 Finance Book of Numbers shows that the companies it designates as "world-class" spend just 0.6% of their revenue to operate their finance structure, using 44.9 full-time employees per $1 billion of revenue. Meanwhile, "peer-group" companies spent 1.13% of revenue on finance and have 93.6 full-time finance employees per $1 billion of revenue.

After the turmoil of the last two years, Hackett's survey shows the top priority this year is improving forecasting capabilities, which was cited by 55% of finance executives, followed by improving the integration of cash management, which was cited by 44%.

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