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.”
Hiring to Handle Business Volume
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.
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).
Growth is Top Priority
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%).
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%)
Revenues on the Rise, Yet Cash Flow Tracking a Concern
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%). 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%)
Snapshot of Six Additional Survey Markets
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: [Click here to download additional survey findings, including U.S. findings by revenue and data from the International markets.]
Most likely to plan to hire over the next six months (85%)
Cite growth as their top priority (52%) over the next six months but are most likely to expect cash flow issues (91%)
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%)
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%)
Least likely to have cash flow concerns over the next six months (56%)
About the American Express Survey of Mid-sized Companies
The American Express® Survey of Mid-sized Companies was conducted in the U.S. and six other countries. Research was completed online among a sample of 339 financial decision makers in U.S. Mid-Size Companies, defined as having revenues of $5 million to $1 billion annually. Interviewing was conducted by Ebiquity Research between June 2 – 19, 2014. Overall, the results have a margin of error of +/- 5.3% at the 95 percent level of confidence. The survey was also conducted in Canada, Mexico, Germany, the U.K., Australia and Japan.
About American Express Global Corporate Payments
American Express Corporate Payment Solutions provide Corporate Cards, Corporate Purchasing Card, and other expense management services to midsize companies and large corporations worldwide. Globally, American Express is a leading issuer of Commercial Cards, serving 62% of the Fortune 500® companies in 2013 and tens of thousands of corporate clients.
For more information, visit business.americanexpress.com.
About American Express
American Express is a global services company, providing customers with access to products, insights and experiences that enrich lives and build business success. Learn more at americanexpress.com and connect with us on facebook.com/americanexpress, foursquare.com/americanexpress, linkedin.com/company/american-express, twitter.com/americanexpress, and youtube.com/americanexpress.