MRO Magazine

Impact of interest rates on company spending varies widely, says study

Calgary, AB -- Sept. 10, 2001 -- How are falling interest rates affecting corporate spending? It depends on whom yo...


Industry

September 10, 2001
By MRO Magazine
MRO Magazine

Calgary, AB — Sept. 10, 2001 — How are falling interest rates affecting corporate spending? It depends on whom you ask, suggests a new survey.

While 36 per cent of chief financial officers (CFOs) cited interest rates as having no impact on business expenditures, nearly two-thirds (62 per cent) of respondents said prevailing rates are factored into their purchasing decisions. Twenty-six per cent of those polled noted that interest rates have a significant impact on how they spend their firms’ money.

CFOs were asked, “How much of an impact do interest rates have on the purchasing decisions you make for your company?” Their responses:

* Significant impact – 26%
* Somewhat of an impact – 36%
* No impact – 36%
* Don’t know/no answer – 2%.

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The survey was developed by RHI Management Resources, a consulting firm used by senior-level accounting and finance professionals on a project basis. It was conducted by an independent research firm and includes responses from 295 CFOs from a stratified random sample of Canadian companies with more than 20 employees.

While many consumers are affected by interest rates when acquiring loans or mortgages, so are most businesses when planning for major acquisitions and other purchases, said David King, regional manager of RHI Management Resources. “Financial executives are continually challenged with projecting company expenses. External factors, such as interest rates, taxes and inflation, are typically considered by CFOs in evaluating expenditures as these additional costs can influence their spending behaviour.”

RHI Management Resources has locations in major cities throughout North America, Europe and Australia, and offers on-line job search services at www.rhimr.com.