Finance During the Crisis: Five Lessons from CFOs

COVID-19 has improved everything for firms, and main monetary officers and their teams have been heads down considering that the pandemic started. Immediately after making certain the physical safety of their individuals and establishing distant performing preparations, the CFOs’ top priority has been running liquidity in a wildly volatile environment.

Quite a few months into the disaster, almost each individual corporation has rationalized running bills, secured financing resources, and taken a tricky glance at prepared cash expenses. Some are exploring governing administration guidance when others have pivoted promptly into new strains of business enterprise.

We have experienced lots of discussions with CFOs considering that the disaster started, and we have heard lots of variations on the exact same theme: If and when we get out of this, we are likely to do matters in different ways. That’s simpler reported than completed.

David Davidson

Even right before the pandemic, there was a developing recognition that lots of conventional aspects of the CFO’s purpose, including organizing, transacting, accounting, compliance, handle, reporting, evaluation, and advising, required to modify. Several this sort of functions are robust candidates for automation, although only a little bit more than a 3rd of finance functions are automated nowadays. Accenture’s world wide CFO research identified the option to automate as considerably as 80{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627} of these functions.

Prior to the disaster hit, the significant dilemma was progress and where by to come across it. With their knowing of vital knowledge — this sort of as business enterprise-line profits, return on investment decision, margins, and other vital performance indicators — and expertise of how to deploy cash, CFOs found them selves uniquely effectively-positioned to support their corporations get on the progress keep track of. But, for the most component, they experienced not produced the changeover to concentration on the organization’s potential. Most finance corporations were being spending their time striving to produce insights from past performance somewhat than hunting forward.

The pandemic is shifting all that. Boards and administration teams, along with CFOs, now see the worth of an adaptable, agile finance purpose that operates in close to-true time. As they work to fix the destruction from the disaster and build a new foundation for executing business enterprise in a post-disaster environment, we have observed that lots of of the CFOs we work with are guided by five vital lessons realized.

1. Automate that which can be automated. Crises can expose gaps and determine organizational cracks. With teams stretched to the restrict, finance features found that they should have automated functions including regimen transaction processing, compliance, controls, and reporting. There is no shortage of very good alternatives, and implementation can no cost up methods for increased worth-added jobs including organizing, analytics, and determination aid to the business enterprise.

Aneel Delawalla

2. Electronic corporations are resilient corporations. Finance features that moved rapidly to established up virtual operations when the pandemic hit — relying in most circumstances upon a robust electronic and technological framework — have found it simpler to manage business enterprise continuity and will, we believe, be in a much better placement to bounce again in a post-disaster environment.

3. Relationships are everything. From banking institutions and other financing resources to important customers and suppliers, corporations found out rapidly whom they could and could not rely on when the likely got challenging. CFOs will likely be putting more work into reinforcing vital associations and into making their personal corporations into trusted customers, suppliers, and debtors. A further facet of romance administration is making and maintaining staff have confidence in and self confidence. As one particular CFO informed us, “Nothing will get completed without having a robust group.”

four. It could be time to re-feel leverage. Economic progress coupled with very low curiosity premiums produced leverage desirable for lots of businesses. But the disaster has underscored the actuality that leverage is a variety of danger. Several CFOs we have talked to want to de-danger by borrowing fewer, or to restructure their whole borrowing framework at the time matters return to a semblance of normality. To do this, they are hunting at strategies to produce more money from operations — for case in point, by performing more closely with customers to speed up the payment cycle by actively checking payment terms.

5. “Black swans” might not be so strange soon after all. Immediately after decades of serious volatility next the world wide monetary disaster, some CFOs might have considered that matters experienced returned to “normal.” It would seem, instead, that this time the “new normal” should be considered of as the “never normal” — a point out of affairs in which agility, alertness, and the means to change directions on quick observe will be important, to start with for survival, and then for progress. Companies will require state of affairs modeling tactics, swift simulation, knowledge-pushed forecasts, and other tools to assess variables and build a route ahead.

Adjustments to this new environment will perform out in distinct strategies for distinct businesses and distinct industries. Some businesses, for case in point, might want to reconstruct their source chains to minimize their reliance upon a small amount of vendors. Some others might want to concentration more on distribution and marketing and fewer on manufacturing, turning some operations more than to 3rd parties. Some might look for to decentralize functions so that disruption in one particular geographic location has fewer world wide affect, or, produce better variability inside the charge structure.

What is apparent, nevertheless, is that the CFO and the finance purpose will be central to running effectively in the post-disaster environment. CFOs have been on the frontline in the disaster, and their worth will improve, not diminish. By automating transactional functions and harnessing knowledge, analytics, artificial intelligence and other technologies to produce much better and further insights, a CFO can regulate quick-expression liquidity challenges when aiding to guidebook the corporation towards a potential marked by rewarding progress.

David Davidson is a senior running director and sales opportunities the CFO & business worth group in North America at Accenture. Aneel Delawalla is a running director and sales opportunities Accenture’s business worth focusing on group globally.  

Accenture, contributor, COVID-19, digitalization, leverage