Survey of Chartered Global Management Accountants finds companies implementing hedging strategies, accelerating investments, forecasting lower demand in anticipation of higher rates.
As interest rates begin to rise, most U.S. CFOs and senior finance leaders see negative implications for their businesses, according to a survey of Chartered Global Management Accountant designation holders by the Amarican Institute of CPAs.
Seventy percent said that a moderately rising interest rate environment would have a slight to moderate negative impact on their companies, according to the survey of 525 CGMA designation holders conducted between August 23 and August 29. An additional 7 percent said it would have a “high negative” impact. Only 13 percent forecast no impact.
Indeed, U.S. CGMAs surveyed said that rising interest rates will have more effect on their businesses in the coming months than any issue other than implementation of the Affordable Care Act. A quarter said that they are putting in place hedging strategies to limit exposure to rate increases, 24 percent are accelerating capital investments to take advantage of current rates and a fifth, 20 percent, are forecasting lower customer demand because of interest rate sensitivities.
“Rising rates require recalibration,” said Jim Morrison, CPA, CGMA and CFO of Teknor Apex Co. in Rhode Island. “Senior finance professionals are focused on all aspects of monetary policy – from potential leadership change at the Fed to its actions on quantitative easing– so that they can make the right adjustments for their businesses and minimize downside risk.”
CGMA designation holders are on the frontlines of many of those decisions, helping businesses navigate the intersection of business strategy and finance. There are more than 128,000 CGMA designation holders globally and who are helping shape 95 of the world’s top 100 brands.