Businesses are moving beyond the impact assessment stage of COVID-19 and into action mode. For many companies, that means dealing with the reduced revenue and cash-flow of March and April, and planning for May and beyond. Others are looking to keep their supply chains running smoothly so they themselves can meet demand. Here are a few expert opinions we’ve found helpful in the past week, and we hope you do, too. We’d love to hear from you, so please join our FP&A Slack Community and share your thoughts and suggestions. It is publicly available to everyone to discuss ideas related to the current crisis as seen from the FP&A perspective.
What the Experts are Saying on FP&A
Deloitte / The Wall Street Journal: Cash Management Strategies to Bolster Supply Chains
Understanding current cash flow can help identify areas of immediate concern, but knowing the risk your supply chain is facing can add much more insight to those cash flow projections. Deloitte offers nearly a dozen strategies to consider as you evaluate your supply chain’s health and its impact on your business. “It is essential to take a full ecosystem and end-to-end supply chain perspective, as any approach will have implications not only for the organization but also for customers.”
Deloitte / CFO Insights: Managing Through COVID-19: Six Imperatives for CFOs
Adequately preparing for the coming economic weakness can put you in a better position to come out the other side, and might even help you identify areas for future growth. But, given the fast-changing nature of the crisis, it will require faster and more flexible planning tools. “The speed at which the COVID-19 crisis is unfolding may likely 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.”
Uncertainty makes it difficult for FP&A to plan accordingly, especially as macro economic and individual business situations seem to change week to week. The cash flow models you prepare today may be quickly outdated, so it’s critical that you not only develop several models, but that they are easily tweaked and updated as conditions change. “Creating a variety of models will allow a business to see its cash flow position under a range of different future circumstances. This allows an organization to quickly adapt processes and build contingency planning protocols as needed.”
McKinsey surveyed more than 2,000 executives around the world to get their views on the efforts being made to control coronavirus and spur economic recovery. The majority of respondents, 59%, were optimistic about the impact of recovery efforts. But even the brightest scenarios come with obvious challenges, and executives know it. “Most executives seem to have internalized this assessment. They hold balanced views regarding possible outcomes.”
The Wall Street Journal: Companies Move Shareholder Meetings Online Amid Coronavirus Lockdown
Stay-at-home rules have already moved many work interactions and professional events onto video chat platforms. Now, CFOs are remaking shareholder meetings to conform with social distancing regulations while keeping schedules for earnings calls, management presentations, and annual meetings. “Listed U.S. businesses usually hold more than 4,500 shareholder meetings between April 1 and June 30. So far this year, at least 920 U.S. companies had announced virtual meetings, up from 283 in 2019.”
Andreessen Horowitz: The CFO in Crisis Mode: Modern Times Call for New Tools
CFOs and FP&A professionals are being thrust into an even more strategic role as companies struggle to protect workers, allocate resources, and adjust to falling revenues. But, as mentioned by Deloitte above, many are struggling with outdated tools that take time away from what’s important. Moving away from a “piecemeal” approach can “significantly reduce time spent acquiring, scrubbing, and structuring data, allowing CFOs to focus instead on the strategic side of their role.”
Modern “fintech” companies have been capturing some of the market controlled by traditional financial services companies. Three well-known and “non-bank” names in that space are now eligible to participate in the U.S. Small Business Administration’s Paycheck Protection Program, which is providing forgivable loans for small businesses. These fintech companies claim the ability to “‘reach those businesses most vulnerable’ in a more timely fashion than traditional financial institutions.”
Stay Tuned for More Useful FP&A Content
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