Market Update - October 2022

Hello and welcome!

October! Where do I begin?! A month where we have seen the market turmoil over the mini-budget, the subsequent sacking of Kwasi Karteng as Chancellor, the resignation of Liz Truss as PM, new chancellor Jeremy Hunt announcing U-turns of pretty much the whole mini-budget and the appointment of Rishi Sunak as Prime Minister….that was all quite a mouthful. Somewhat of a shambles to be perfectly honest. 4 Chancellors and 3 Prime Ministers since July. Let’s hope for some stability now. The focus has to be on calming the markets, easing inflation and supporting families that need it.

The finance recruitment market in London has remained fairly similar to last month with a continued drop in vacancies and adverts (albeit a slow drop), but continued difficulty in hiring.

Key Senior Finance hires for October

FP&A Analysts

During chaotic times with high inflation, budgeting and forecasting work is a high priority and the need for FP&A Analysts has increased. Candidates that have strong financial planning and budgeting experience will be needed for the remainder of the year and into 2023.

Finance Business Partners

CFOs currently see cost savings as one of the highest priorities for businesses. Finance Business Partners that can demonstrate leading projects including, integrating business units, driving efficiency, and cost savings between departments are in hot demand.

Financial Modellers

We’ve been engaged on several roles for financial modellers. Candidates that can display strong modelling experience, specifically around scenario modelling and sensitivity analysis are highly sought after. Other important work includes building business plans and supporting with funding due diligence supporting scaling businesses.

Interim

Despite the crushing blow that the Government have u-turned on repealing the IR35 reforms next year, the interim senior finance market remains in demand. The post-budget market turmoil and high inflation, have seen many companies opting for contractors in the interim, assessing how things pan out next year before making decisions on permanent hires.

What's happening in the market?

The stats don’t lie, the market is slowing down. The amount of vacancies and adverts are falling, but it’s currently not making recruiting any easier. There is still a huge shortage of talent in the market and companies are struggling to hire.

Data from Adzuna shows although there is a slow down in hiring, UK Accounting and Finance vacancies are still very close to last year levels. The rate of A&F adverts over the last 12 weeks is at 97% compared to the same period in 2021. The market is slowing and vacancies and adverts are falling, but there is still a profound lack of available talent in the market.

In Deloitte’s most recent CFO survey (October 2022), it was noted that CFOs are continuing to report high levels of recruitment difficulties and although they see some improvement next year, a significant portion (more than 25%) still expect to continue experiencing severe recruitment difficulties beyond 2023.

Popular tech stack for finance

I’m often asked by my contacts what are the popular systems and tech stack for finance, and more importantly why are they popular?

Over the last month, I’ve been looking into this and asking my network and contacts on LinkedIn. I got responses from a lot of you and many give me valuable insights, and these are the results. I began with asking “What is the best finance system for an early stage start-up?”

It was a dominating win for Xero! Sage came in 2nd with 14%, Quickbooks was 3rd with 11% but Xero was by far the front runner with 71% (Other systems made up the other 4%). But why?! Xero has become the popular choice for start-ups and SMEs as it is cloud based, very user-friendly and simple to use, and integrates with many great applications managing payroll, HR, expenses.

Here are some examples of great apps that Xero integrates with;

1. Cashflow: Float, Dext Precision and Spotlight Reporting

2. Timesheets: Harvest and Tanda

3. Expenses: Xero expenses, Dext, Expensify and Spendesk

4. Resource management: Productive and Spotlight Reporting

5. AP and PO approvals: Approval Max and Lightyear

But then what? What happens when you’ve outgrown Xero?

A lot of companies struggle with finding a suitable system to meet their needs as they grow. So I’ve also been asking “What is the best mid-sized system for a scaling business?”

Netsuite came up the winner with 46% of the vote! Microsoft Dynamics 365 came in 2nd with 32% of the vote and Work Day came in 3rd with 11% of the vote (Other systems made up the remaining 11%). Again, I was interested to know what is it about Netsuite that makes it a popular system for scaling businesses.

1. Integrates well: Netsuite provides seamless integration between finance and other core business areas and can be set up depending on a specific sector, configured, and tailored around a specific business, with CRM built in

2. Global Scalability: Great for scaling companies’ multiple offices in different jurisdictions, having the capability for multi-company groups allowing consolidation across companies with overseas entities and holding companies

3. Reporting: Good level of financial and management reporting available (inc financial modelling, scenario and analysis)

4. Good with High Volumes: Can handle large amounts of transactions compared to smaller systems that can be slower

5. Easy to Use: Post integration, apparently it is very straightforward to use and they have a helpful customer support team on hand

CFO outlook for 2023?

Aon reported that 79% of CFOs expect a recession within the next 12 months, and only 35% of finance leaders feel very prepared for an economic downturn.

Deloitte’s recent CFO survey notes the cost of credit and economic uncertainty is clearly on the minds of CFOs with 77% reporting the levels of external financial and economic uncertainly as high or very high – the highest reading since the beginning of Covid-19. I’ve noted below some other key findings from the reports;

Revenue and operating costs

CFOs are expecting a drop in revenue and an increase in operating costs, with 91% expecting operating margins to decline over the next 12 months.

CFO priorities over the next 12 months

During the pandemic in 2020, we saw reducing costs and increasing cash flow as key priorities but over the last 18 months, this has shifted towards growth and investment, introducing new products and expanding by acquisition. The latest report shows CFOs top 2 priorities have shifted to cost reduction and increasing cash flow. These defensive strategies match the recruitment activity we have seen recently with key hires in FP&A and Finance Business Partners to aid in cost reduction projects and increasing cash flow.

Top 5 risks to businesses

1.??????Higher energy prices

2.??????Rising geopolitical risks worldwide

3.??????Further rate rises

4.??????Higher inflation

5.??????Persistent labour shortages

Average wage costs

The increase in wages over the last 12 months has been 4.6%, and CFOs are expecting this to rise to 6% in the next 12 months. Despite an anticipated drop in hiring in 2023, high inflation and continued recruitment difficulties is fuelling an expected acceleration in wage costs over the next 12 months.

Recruitment difficulties

41% of CFOs have reported significant or severe levels of recruitment difficulties in Q3 and although CFOs are expecting a reduction in hiring over the next 12 months, more than 25% still expect severe difficulties in recruitment in 12 months.

The report suggests that the next 12 months are going to potentially be a tough time for businesses with less revenue and higher costs. Although a reduction in hiring is expected, this is not likely to change how difficult it is to hire and we expect the demand for senior finance candidates to remain strong to support businesses through these challenging times.

DE&I Event – Thursday 24th November

Last month I mentioned we are hosting a Diversity, Equity and Inclusion event on Thursday 24th November. It’s proven very popular, so we have added an additional speaker at the event. In addition to Dan Robertson, we now have additional speaker - Yasir Mirza, who is the Global Head of Diversity and Inclusion for the Financial Times.

Please see the flyer below with all the info, click on the link and register your interest now.

Thank you for taking the time to read our senior finance market update. As always, if you would like any advice on hiring, candidates, salary benchmarking or a general chat about the market or to discuss your next role; you can now click here to book a 30-minute call.