Source: Enterprise Times
Author: Gordon Stuart
Around the world, finance executives have been among the first to see the true economic impact created by COVID-19. But what should their response be? We asked senior members of Unit4’s own finance team for their advice and insights. They advise five essential actions.
1: Now’s the time to show extra flexibility
Alistair Gurney, Group FP&A Director, says: “Now’s time to see how flexible you can be. Your budget is the wrong shape, your team is getting to grips with a new working environment, and everyone in the business is stressed. Belligerently defending arbitrary lines in the sand won’t get you far. Of course, hard commercial and personal judgments still need to be made. But, for years to come, we’ll be judged by our teams and customers for how we behave throughout this period. Think about where you can be the person to ‘give’ a little and be more flexible — so you can exit COVID-19 feeling proud of your actions.”
2: Respond instinctively — having decided your key actions already
Gordon Stuart, CFO recommends: “Be prepared. We don’t always know what will happen in our business, but we do know the levers to pull to compensate. Having a predefined level one, level two, and level three set of actions that you can rapidly execute to meet an oncoming threat is a must-have. I liken it to a fire drill. We complete training, so we know how to act when there’s a real fire. We don’t hear the alarm and then form a committee to work out what to do next – we’re hard-wired to respond instinctively. So, set the trigger points – such as missed sales bookings, a drop in revenue, lost customers or whatever is relevant to your business – and then execute your defensive actions rapidly. Get this in place now, so if a second wave comes along, you’re better prepared.”
3: Consider how much you want to save from remote working
Hanna Beate Nerdrum, Finance Director, Nordics advises: “Like many others, I’ve been working from home. It’s saved time and money. As organizations design their “reopening” plans, they need to consider what role “work from home” will play moving forward. This has huge implications for finance. What savings crystallize when organizations downsize real estate, reduce business travel, move to online training and shift to virtual events for sales kickoffs, leadership meetings or planning sessions? Every business will need to figure out the right balance. Being flexible will be critical as they go through this process – it will evolve over time. Finance Directors need to start exploring potential savings now – and whether those savings are ‘banked’ or reinvested in priority areas of the business. This could represent some welcome news, which we all need.”
4: Listen carefully … when considering the kind of workforce you’ll need to grow
Carina Ekenstedt, Regional Finance says “It’s often a mistake for companies to react to challenging times by instantly cutting their workforce. When market confidence returns, your employees will be the ones to turn things around faster for you. Now is a good time to consider where you need strength and depth to boost resilience along with the right balance required between permanent staff and contractors to maximize flexibility. Equally, understanding the right technology that can help you to replace manual tasks with self-driving IT-based processes. This calls for key conversations with your colleagues across all areas of the business. But pay attention to the data too. At Unit4, we have found that engagement pulse surveys give us real-time insights into our employees’ wellbeing, performance and motivation which, in turn, results in better decision making and improved employee engagement.”
5: We live in uncertain times, but there’s no need for guesswork
Arturo Guillen, CFO, North America comments: “Right now, there’s huge pressure on executives to make strategic choices about the future — when we know so little about tomorrow. Some of the decisions could prove to be wide of the mark; others may turn out to be far-sighted. What’s vital is that we understand the financial implications of every move. That’s why automation and artificial intelligence (AI) in financial planning and analysis (FP&A) tools can be valuable. By simulating a range of scenarios and key actions — related to everything from revenue changes to employee costs and interest rates — you see how they impact your balance sheet and cash flow.”
At times like these the irrelevance of elaborate long-term planning is reinforced and the need for short-term, dynamic scenario-based planning becomes clear. Overall, the COVID-19 crisis offers FP&A teams and businesses worldwide an opportunity to refine their planning processes to help them steer through this tunnel and emerge stronger at the end. And much of this comes down to having the right finance culture, as outlined in this ‘finance first: unlocking innovation’ e-book.