For businesses large and small, this is truly an unprecedented time. Predictions on unemployment as well as how the CARES Act will impact the economy are starting to become slightly more clear, but we are still in uncharted waters. We’ll continue to compile this list of publicly available resources — we personally found these insights helpful, and we hope you do, too.
What the Experts Are Saying on FP&A
The Wall Street Journal: Pandemic Shows Importance of Stress Testing
“[Paychex] expects the shock of the coronavirus to prompt more nonfinancial companies to start conducting similar exercises when they develop their annual financial plans.” Requiring banks to undergo annual “stress tests” to detail how they would react to “nightmare scenarios” was one outcome of the 2008 housing market crash. Now that we’re in another such scenario, financial services companies are somewhat more prepared to examine and model their financial outlook. With the COVID-19 crisis hitting all sectors equally, it could prompt other industries, or even individual businesses, to instill a similar methodology of planning for these types of nightmare scenarios.
The consulting firm shares their view of the “critical steps CFOs and finance organizations can take across three horizons: immediate safety and survival, near-term stabilization of the business in anticipation of the next normal, and longer-term preparations for the company to make bold moves during recovery.” Cash, scenario planning, and communications are the immediate concerns, according to the article. As the crisis subsides and the outlook becomes more clear, CFOs should look to stabilizing the business.
“For large companies, the centerpiece is the authority given the Treasury to use $500 billion in funds to leverage loans and loan guarantees by the Federal Reserve. Smaller businesses with 500 employees or fewer can receive emergency grants and forgivable loans from a separate pot of almost $500 billion.” We all know the numbers, but what’s yet to be determined is how it will be implemented and who this will directly impact. As detailed process information trickles out, this article looks at some of the specific areas of relief that businesses can expect.
McKinsey sees the fallout of COVID-19 lasting well beyond the current supply-chain instability and coming liquidity issues. Their recommendation is to start preparing for the “next normal”, which they see as 1 to 2 years away. So as you’re scrambling to react to today’s situation, you should already be thinking about tomorrow. “[T]here are two practical steps you can take to help stay ahead: (1) Launch a PLAN-AHEAD TEAM to get ahead of the next stage of the crisis. (2) Direct that team to work across multiple time horizons.”
Accounting Today: Look for the opportunities amid COVID-19: AICPA
Paraphrased from a webcast, Christina Kite, vice president of global business strategy and analytics at Oracle, recommends a current focus on your critical customers, suppliers and employees, especially customers performing activities related to the COVID-19 crisis. But, Kite also offers a five-step plan for analysis, modeling, and planning as you look for new opportunities. ““This is a great opportunity not only for finance to have a seat at the table, but to exhibit leadership at that table.”
Stay Tuned for More Useful FP&A Content
This week we launched our first FP&A Live Roundtable — an open forum for business executives, practitioners, and industry thought leaders to engage in a thoughtful discussion about all things FP&A and how you can navigate the day-to-day complexity of the COVID-19 crisis. Also, our FP&A Slack Community is now live and publicly available to everyone. Please dive in and invite your friends and colleagues to participate