The FINANCIAL — Conditions are ripe for investments at medium-sized enterprises over the next six months, according to the inaugural American Express Survey of Mid-sized Companies. Revenues are reported to be up year-over-year (70%) and a large majority (91%) of U.S. middle market companies are confident they can access the capital they need to grow. More than eight-in-ten firms (81%) plan to make an investment in human capital and hire staff over the next six months.
However, even with increasing revenues and perceived access to capital, more than eight-in-ten (83%) expect cash flow concerns to arise over the next six months. And surprisingly, even those with a centralized “very satisfactory” accounting/expense management system in place expect issues with accurately tracking cash flow into and out of the business.
“Medium-sized enterprises in the U.S. are in an excellent position for expansion,” said Susan Sobbott, president, Global Corporate Payments, American Express. “Their positive outlook is bolstered by increasing revenues and access to capital for investment, however getting a handle on cash flow continues to be challenging,” Sobbott added.
Hiring appears to be on the upswing at medium-sized enterprises. More than half of companies (55%) say they currently have more employees than they did one year ago. Among those currently planning to add staff, nearly six-in-ten (57%) say they need to hire to support business volume. Additional reasons for hiring include:
A new business venture (38%)
The need for seasonal help (29%)
The company has finally found the right candidate for positions they have been trying to fill for some time (27%)
Among those who plan to add staff over the next six months:
52% plan to hire only full-time employees
14% plan to hire only part-time employees
16% plan to hire both full and part-time staff
In addition, more than one-quarter (26%) plan to increase investments in their sales and marketing functions, according to American Express Company.
The survey results point to additional good news for those considering employment at medium-sized enterprises. One third (33%) of companies say the main reason they are able to retain employees is their compensation package (including competitive salary and stock options).
Financial decision makers surveyed have a positive outlook on business prospects over the next six months, irrespective of how the economy behaves. Forty-four percent say they expect their business to grow regardless of the economy, and a similar number (40%) have an even more positive outlook, saying they actually see the economy improving and expanding opportunities for their business.
The single most important priority for nearly half of U.S. business owners (47%) over the next six months is growing their business. As they look to expand, companies believe investments in infrastructure, including technology and operations, will most help them grow (26%), in addition to acquiring new customers (25%), followed by accessing more cash flow/capital (20%), retaining/growing existing customer relationships (15%) and attracting and retaining top talent (13%), according to American Express Company.
As they tackle growth companies face a variety of challenges, the greatest is managing expenses/the rising costs of doing business (25%) followed by:
Acquiring new customers (18%)
Accessing cash flow/capital and the uncertain economy (each, 14%)
Attracting and retaining top talent (12%)
Retaining/growing existing customer relationships (10%)
Regulatory and compliance requirements (7%)
Across all the companies surveyed, seven-in-ten medium-sized enterprises say their revenues are more than they were a year ago, with more than one-in-four (26%) saying the same and just 5% reporting they are less when compared year-over-year. However differences exist based on the size of the company:
87% of middle market companies with revenues of $51-$100 million are most likely to say their revenues are higher than they were a year ago
67% of those at the upper end of the middle market, those with revenues of $101million – $1 billion, say revenues are up
63% of those or those at the lower end, with $5 million- $50 million reported increased revenues versus a year ago
When surveyed further on financial management processes, the data revealed that most companies have a centralized expense / accounting management system in place (74%), according to American Express Company. Nearly all (99%) are “satisfied” with the process, in fact sixty-one percent report they are “very satisfied.” That said, the greatest cash flow concern is the ability to accurately track cash flow both into and out of the business (29%). Additional cash flow issues include:
Having enough cash on hand to win new business (20%)
Collecting on accounts receivable (19%)
The ability to pay bills on time (9%)
The ability to meet payroll (7%)
In addition to the U.S., the American Express Survey of Mid-sized Companies was conducted in six other countries. Below are some highlights, comparing all markets surveyed:
Canada
Most likely to plan to hire over the next six months (85%)
Mexico
Cite growth as their top priority (52%) over the next six months but are most likely to expect cash flow issues (91%)
Germany
Most likely to tap international markets (93%) and most likely to plan to invest in data security in the next year (83%)
United Kingdom
Most positive outlook of all markets surveyed; see the economy improving and expanding opportunities for their business (48%)
Australia
Is second, behind the U.S. in identifying the management of cash flow/capital as the most important priority, over the next six months (26%)
Japan
Least likely to have cash flow concerns over the next six months (56%)
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