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Gartner Says 54% of Small Organization CFOs Plan to Slow Pay Vendors to Cope With COVID-19 Impacts

Latest CFO Survey Also Reveals 84% of Small Organization CFOs Are Delaying or Negotiating Rental Payments for Coming Months

A Gartner, Inc. survey of 192 CFOs and finance executives on April 6, 2020* revealed the majority of CFOs surveyed plan to slow pay vendors to preserve cash in the coming weeks. The CFO respondents from small organizations (with revenue under $500 million) are also actively pursuing flexibility in their rental payments strategy, with 84% reporting that they are seeking some level adjustment to their rent obligations in April and beyond.

“CFOs are taking a variety of proactive cash management measures in the wake of this economic turbulence, with more than a third of respondents indicating that customer receipt payments will be delayed or go unpaid,” said Alexander Bant, practice vice president, research, for the Gartner Finance Practice. “Fifty-seven percent of large firms with access to credit lines are actively drawing down upon them, while smaller firm CFOs are more often having to take more aggressive measures, including delaying rent and payments to vendors.”

In addition to dealing with wide-scale disruptions from COVID-19 impacts as many locations have imposed lockdowns, staff is forced to work remotely and supply chains come under strain, both large and small company CFOs face the prospect of delayed or unpaid customer bills (see Figure 1).

Figure 1: CFOs Report 36% of Customers Payments Will Be Late or Not Paid  

Source: Gartner (April, 2020)

While significant numbers of CFOs of all the companies surveyed planned to draw down credit lines where available, slow-pay vendors, and access government stimulus funding, the data reveals some distinct differences between how large and small company CFOs are dealing with their economic and operational challenges.

  • Large organization CFOs were 9x more likely to consider asset sales compared to smaller firms.
  • Large organization CFOs were more actively drawing on credit lines (57%) compared to smaller firms (46%).
  • Small organization CFOs were nearly 2x more likely to be withholding rent for April and May compared to large firms, with 84% of the former indicating they will negotiate, delay or only partially pay rent payments in the coming months.

“The COVID-19 crisis is exposing the fault lines between larger, better-capitalized companies which have more operational flexibility, and smaller firms under more stress,” said Mr. Bant. “Our survey data shows, however, that a majority of CFOs of both large and small firms feel confident in being able to meet their critical payment needs for at least the next 90 days.”   

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