As CFO’s continue to plan for changing cash flow realities, new economic forecasts for the coming months and quarters are beginning to take shape. However, planning for a range of scenarios is still the best way to combat continued uncertainties. The challenge of working from home also remains a hot topic, but more FP&A teams are starting to explore the benefits of keeping at least some workers stationed in their home offices even after this crisis ends.
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
The confidence levels of CFO’s in their preparedness to weather the COVID-19 ambush have changed over the last five weeks. Business transformation will be a necessity, but knowing where to invest or pull back will be elusive for those without access to the right insights. “It is incumbent upon the CFO to rely on his or her data to provide the company with the best possible vision for the future, and to provide the requisite tools.”
McKinsey: Digital strategy in a time of crisis
Although the world seems to be stuck in place, it does continue to move forward, especially as businesses adapt to work-from-home restrictions and prepare for the country to reopen. Digital transformation is now less for futureproofing and more for survival. Organizations must boldly and quickly adopt digital workflows, mimicking how “healthcare providers have moved rapidly into telehealth, insurers into self-service claims assessment, and retailers into contactless shopping and delivery.”
Deloitte / The Wall Street Journal: Toward COVID-19 Recovery: 3 Economic Cases
Deloitte has developed three potential scenarios for the next 18 to 24 months, ranging from a mild to severe economic impact. FP&A teams can use these to guide planning, modeling, and cash flow forecasts as businesses prepare for what’s next. “Considering a range of potential outcomes can help to reveal the wisest—and most resilient—path forward.”
Another recent CFO survey indicates that FP&A teams are shifting investment priorities based on what key customers are doing, underscoring the need for CFO’s to spend even more time with customers in the near-term. “Being on the front lines, listening to how their key customers are modeling out the recovery and what things will change, will catapult effective CFOs ahead of their counterparts.”
Uncertainty is the reality for every business. Building a cash flow model that can be quickly and easily updated as conditions change can give you a more accurate view of which areas of the business need immediate attention. “Many organizations don’t have the financial strength to survive short-term crisis or business disruptions. Having a cash-flow forecasting model on hand is vital for evaluating a company’s liquidity over a specific timeframe.”
Managing cash flow is job one as businesses push their way through this crisis, but that puts the CFO in the spotlight. This article offers 7 tips to guide CFOs as they answer increasingly critical questions from their teams, the business, and investors. “As a finance chief, you have the leadership skills, the financial expertise, the strategic thinking and the operational aptitude to guide your company through a once-in-a-career renaissance.”
A CNBC/Change Research survey found that 24% of those currently working from home would like to continue doing so indefinitely. This could be an opportunity to reduce costs for some companies, but that may impact other downstream industries. “If businesses decided to save money by renting or buying less commercial office space as a larger percentage of their employees work from home, that could translate into hundreds of millions of dollars in losses for builders and developers.”
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.