New research commissioned by Epicor Software Corporation to Redshift Research reveals that close to half of CFOs in Asia Pacific rely on “gut-feel” and instinct to make business decisions, as access to accurate empirical data is limited.
The survey covered 1532 financial decision makers in businesses with 100+ staff spanning the manufacturing, distribution and service industries in Australia, China, France, Germany, Hong Kong, Mexico, Singapore, Sweden, the UK, US, and Canada.
Survey results showed 47 percent of APAC CFOs have difficulties making vital business decisions due to poor data.
The use of gut-feel, in lieu of fast access to accurate internal data, has emerged as a practice to mitigate delays in decision making, and introduces errors as CFOs grapple with today’s disruptive digital environment.
The survey revealed that an inability to access the right financial information is having a direct impact on business performance and in turn CFOs’ reputations. Nearly half of all CFOs in APAC (49%) said “increasing profits” was their top business objective in 2015.
However, just under half (44%) of CFOs say that decisions are often made opportunistically to exploit situations as they arise and one-third (27%) said that financial decision-making is hampered by a lack of time and resources.
Looking at Hong Kong specifically, the study found that 45% of CFOs find themselves in situations where they need to rely on “gut-feel” and instinct, in lieu of data, to make business decisions. Indeed, 45% blame poor data for difficulties in making vital business decisions. This is in line with the APAC average, and very significant at one in every two CFOs.
According to the survey, using empirical data rather than gut-feel is more likely to result in profit. Of the CFOs relying on empirical data and hard facts across the globe, 72 per cent also experienced a profit increase.
Despite its importance for profitability, CFOs said visibility of financial information is often less than perfect in many areas; only 37% of APAC CFOs felt they had “good visibility” of financial information including: overall and business unit performance, product line performance and profitability, sales and labor costs, sales forecasts, raw material costs, and customer profitability. That number falls to just 34% in Hong Kong.
This is taken from the article Finance decisions based on ‘gut-feel’ put profits at risk and has been written by SMBWorld Asia Editors
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