Finance During the Crisis: Five Lessons from CFOs

COVID-19 has changed every thing for corporations, and chief monetary officers and their groups have been heads down because the pandemic commenced. Following guaranteeing the bodily protection of their individuals and establishing distant working arrangements, the CFOs’ prime precedence has been taking care of liquidity in a wildly volatile ecosystem.

Quite a few months into the disaster, pretty much each corporation has rationalized working charges, secured financing sources, and taken a tricky search at prepared money expenses. Some are exploring government help even though many others have pivoted speedily into new lines of company.

We have experienced numerous discussions with CFOs because the disaster commenced, and we have heard numerous variations on the exact same theme: If and when we get out of this, we are likely to do points in another way. Which is less difficult stated than completed.

Even just before the pandemic, there was a expanding recognition that numerous regular components of the CFO’s role, like organizing, transacting, accounting, compliance, regulate, reporting, analysis, and advising, necessary to transform. A lot of these types of things to do are solid candidates for automation, even though only somewhat a lot more than a 3rd of finance things to do are automated right now. Accenture’s world CFO exploration determined the option to automate as a great deal as eighty{744e41c82c0a3fcc278dda80181a967fddc35ccb056a7a316bb3300c6fc50654} of these things to do.

In advance of the disaster strike, the huge question was progress and wherever to discover it. With their being familiar with of essential information — these types of as company-line revenue, return on expense, margins, and other essential performance indicators — and information of how to deploy money, CFOs found themselves uniquely very well-positioned to support their organizations get on the progress track. But, for the most section, they experienced not created the changeover to concentration on the organization’s long term. Most finance organizations ended up paying their time making an attempt to build insights from past performance somewhat than wanting forward.

The pandemic is transforming all that. Boards and management groups, alongside with CFOs, now see the great importance of an adaptable, agile finance function that operates in near-real time. As they function to repair service the injury from the disaster and create a new foundation for executing company in a publish-disaster ecosystem, we have observed that numerous of the CFOs we function with are guided by 5 essential lessons realized.

1. Automate that which can be automated. Crises can expose gaps and identify organizational cracks. With groups stretched to the limit, finance capabilities found that they ought to have automated things to do like schedule transaction processing, compliance, controls, and reporting. There is no shortage of great alternatives, and implementation can free up resources for higher benefit-extra responsibilities like organizing, analytics, and decision aid to the company.

two. Digital organizations are resilient organizations. Finance capabilities that moved speedily to set up digital functions when the pandemic strike — relying in most cases upon a solid digital and technological framework — have found it less difficult to sustain company continuity and will, we believe, be in a far better placement to bounce back again in a publish-disaster ecosystem.

three. Associations are every thing. From banks and other financing sources to major customers and suppliers, corporations found out speedily whom they could and could not depend on when the likely received hard. CFOs will probably be placing a lot more energy into reinforcing essential relationships and into making their personal organizations into reliable customers, suppliers, and debtors. A further factor of partnership management is developing and keeping staff have faith in and self confidence. As 1 CFO informed us, “Nothing gets completed without a solid crew.”

4. It may be time to re-believe leverage. Financial progress coupled with minimal curiosity fees created leverage eye-catching for numerous firms. But the disaster has underscored the truth that leverage is a form of chance. A lot of CFOs we have talked to want to de-chance by borrowing fewer, or to restructure their entire borrowing framework at the time points return to a semblance of normality. To do this, they are wanting at ways to crank out a lot more funds from functions — for instance, by working a lot more intently with customers to accelerate the payment cycle by actively monitoring payment conditions.

5. “Black swans” might not be so abnormal right after all. Following many years of severe volatility subsequent the world monetary disaster, some CFOs might have considered that points experienced returned to “normal.” It appears to be, as a substitute, that this time the “new normal” ought to be considered of as the “never normal” — a condition of affairs in which agility, alertness, and the ability to change instructions on short observe will be necessary, initial for survival, and then for progress. Firms will need to have circumstance modeling methods, quick simulation, information-pushed forecasts, and other equipment to evaluate variables and create a route ahead.

Adjustments to this new ecosystem will play out in distinct ways for distinct firms and distinct industries. Some firms, for instance, might want to reconstruct their source chains to lower their reliance upon a small variety of sellers. Many others might want to concentration a lot more on distribution and marketing and advertising and fewer on manufacturing, turning some functions over to 3rd functions. Some might request to decentralize things to do so that disruption in 1 geographic location has fewer world influence, or, develop greater variability within just the charge construction.

What is obvious, however, is that the CFO and the finance function will be central to working proficiently in the publish-disaster ecosystem. CFOs have been on the frontline in the disaster, and their great importance will improve, not diminish. By automating transactional things to do and harnessing information, analytics, artificial intelligence and other technologies to build far better and deeper insights, a CFO can manage short-term liquidity concerns even though serving to to guideline the corporation toward a long term marked by financially rewarding progress.

David Davidson is a senior taking care of director and sales opportunities the CFO & organization benefit team in North America at Accenture. Aneel Delawalla is a taking care of director and sales opportunities Accenture’s organization benefit targeting team globally.  

Accenture, contributor, COVID-19, digitalization, leverage