Recent business news has turned away from dealing with the current situation to planning for what comes next. The U.S. is starting to talk about easing work and social distancing requirements, but when that happens and how the economy responds is anyone’s guess. In the meantime, we’ll continue to compile this list of publicly available resources which we personally found helpful, and we hope you do, too. We’d love to hear from you, so please join our FP&A Slack Community and share what you are learning. It is publicly available to everyone to share insights and discuss ideas related to the current crisis as seen from the FP&A perspective.
What the Experts Are Saying on FP&A
A new survey from CFO Research sheds some light on the financial impact COVID-19 will have on businesses. Over 90% expect a Q1 drop in revenues, with 39% expecting revenues to be down more than 20%. On the bright side, almost half expect a recovery to be quick. However, half also said that they are delaying or cutting investments. “To keep existing employees paid and business alive, of course, the name of the game is to conserve cash. Cash flow was the second most-cited worry of executive management teams.”
Many of us are now several weeks into this new work-from-home arrangement. How long this will last is unknown, but as workers, managers, and businesses adjust, they are finding benefits they may wish to retain even after the end of social distancing. “Nearly three out of four finance leaders…said they plan to move at least 5% of their workforce that had previously reported to an office to a full-time, remote schedule.”
Deloitte / The Wall Street Journal: Talent and Liquidity: Managing Through COVID-19
Executives from Deloitte lay out six “distinct imperatives” CFOs should take action on today to help protect companies and workers. Preparation and communication are key, but so is the use of new techniques to prepare for more economic fallout as well as the eventual recovery. “(T)he speed at which the COVID-19 crisis is unfolding may require CFOs to use new tools—virtualization and scenario-based forecasting, for example—in addition to the traditional levers they have used to act swiftly and reasonably.”
The magnitude of the coronavirus crisis is pushing some companies to the point of collapse. And while the government is taking extreme steps to help prevent economic disaster, many companies will need to consider equally extreme measures to save themselves. “Given the sheer magnitude of our current crisis, the bankruptcy process will be even more critical: As painful as this reckoning is likely to be, substantial restructurings must occur across several industries on accelerated timelines.”
The accounting firm has released a series of podcasts to discuss how FP&A can react to the current business disruptions. This installment looks at how teams might want to approach accounting and reporting for the obviously challenging first quarter of 2020. The podcast covers, “different models and triggering events for impairment assessments of tangible, intangible, and financial assets; the accounting for the impact on taxes, revenue recognition, inventory and debt, and considerations related to internal control over financial reporting.”
The New York Times: How the Virus Transformed the Way Americans Spend Their Money
Consumer spending has changed dramatically in the past 30 days. While grocery stores and online entertainment revenues are up, sales in travel-related industries have dropped 85% from last year while retail, entertainment, fitness, restaurant, and other industries have seen drops of 50% or more. “‘This is the sharpest decline in consumer spending that we have ever seen,’ said Luke Tilley, chief economist at Wilmington Trust.”
Stay Tuned for More Useful FP&A Content
We’ve launched a recurring FP&A Live Roundtable for business executives, practitioners, and industry thought-leaders to engage in a thoughtful discussion about all things FP&A, which happens each Tuesday at 1:00 p.m. Eastern Time.