Being Planful: Helpful FP&A Resources to Navigate an Uncertain World

Being Planful: Helpful FP&A Resources to Navigate an Uncertain World

The Bureau of Labor Statistics reported last week that employment rose by 4.8 million in June, lowering the unemployment rate to 11.1%. That’s down 2.2% from May and the second consecutive month of decrease but still nearly 8% higher than pre-pandemic levels. So while the trajectory is positive, there’s continued uncertainty about the speed and breadth of the recovery. And, regional COVID-19 spikes add to the uncertainty around reopening, which all means continued revisions of plans, forecasts, and models for FP&A.

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

CFO Dive: How often should CFOs speak with the board?

It’s the CFO’s job to keep the board well-informed during “normal” times, but now that flow of information should be ramped up considerably. Planful’s CEO, Grant Halloran, spoke with CFO Dive to explain why CFOs should be deepening that relationship given the current conditions. “But it’s not enough to simply make projections into uncharted territory. ‘You can’t just throw a bunch of numbers at the CEO and board members,’ Halloran said. ‘You need to explain the risks, the decisions underpinning the forecast, and whether things need to be redone.’”

Deloitte / WSJ: Fear, Not Lockdowns, May Drive Economic Activity

A study by the University of Chicago points to fear of contracting the coronavirus as the reason for most of the decline in economic activity. The researchers say just 7% of the decline can be attributed to government-imposed lockdowns. The suggestion is those fears may last much longer than any lockdown, so FP&A might want to take a longer-term view of potential recovery targets. “Easing economic restrictions alone will not be enough to significantly boost economic activity. Rather, the only way to bring activity back to pre-crisis levels is to convince consumers that the virus is no longer a risk.”

CFO: Scorecard: Safeguarding Working Capital

The 2020 CFO Scorecard found that companies have about 10% of working capital “needlessly tied up in receivables, payables, and inventory.” That poses a huge challenge for FP&A as suppliers demand cash and customers take more time to pay. But the Scorecard also points to opportunities for improvement, and that Finance should look to help strategic suppliers when they can. “‘Every organization is being even more affected by the resilience (or lack of) of their suppliers. We would anticipate, for the first time in recent memory, that some organizations will shorten payment terms if they believe their suppliers need support.’”

TechRepublic: Operations remain at or above 80% of pre-crisis levels for 72% of CFOs

A recent CFO survey by Deloitte shows that most CFOs are expecting a “slow to moderate” recovery. More than half don’t expect to reach pre-pandemic operating levels until at least 2021. “Technology and energy/resources CFOs expect a faster return to pre-crisis operating levels. Manufacturing, retail/wholesale, healthcare/pharma, and services are the most likely to expect a return to pre-crisis operating levels by the fourth quarter of 2021 or later.”

CFO Dive: Short-Term Cash-Flow Forecasting: Metric of the Month

We missed this one earlier in June, but short-term cash flow forecasting is essential in our current environment. Constant change requires frequent revisions to cash flow forecasts so everyone makes better decisions based on the most recent information. That means cutting FP&A cycle times down to hours instead of days. “A company with a month or less cash on hand may need to generate a forecast weekly or even multiple times a week as it works to keep the business above water.”

CFO: Regaining Momentum in Cross-Border Operations

We’ve seen much written urging CFOs to look beyond today’s crisis and find opportunities where they can invest for tomorrow’s success. CFO Research contrasted studies from January and April to spot trends, and it doesn’t appear as though strategic moves like global expansion, maintaining supply chains, and M&A activity have been altered by the pandemic. “They’re seeing beyond the present moment toward economic recovery and organizational growth, and many of their pre-pandemic concerns, such as those related to supply chains, have only intensified during the crisis.”

Forbes: The CFO Essential Summer Reading List

For those CFO’s with enough free time to consider reading a book, this piece offers nearly 60 recommendations. Although half are specifically aimed at finance leaders, the topics range far from finance. “Reflecting the modern role of the chief financial officer, the books these executives read focus on strategy, leadership, and problem-solving.”

Stay Tuned for More Useful FP&A Content

We’ll be continuing this weekly update with links related to how FP&A and CFO’s are leading their organizations through the continuing recovery. If you have comments, questions, or suggestions, please engage with us on Twitter, LinkedIn, and Facebook.

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