How the Pandemic Changed the Cash Flow Playbook

Planful is full of FP&A professionals, from our product and sales teams to our services and implementation teams, and, of course, our finance team. Planful was built this way so we’re always talking to our customers in the language of finance. We’ve been in your same roles, and many of us know, first hand, the challenges you face everyday. 

I’m a good example of that approach. I was educated in accounting and finance and spent the first 5 years of my career as an auditor and FP&A professional with Ernst & Young. So I don’t just know the theory behind FP&A, I know the practice, too. 

But over the past several months, the challenges faced by FP&A have been flipped on their heads by the COVID-19 pandemic. No matter how much real-world experience anyone had before 2020, this is a totally new ballgame. To better understand the current demands on FP&A, I talk with our customers nearly every day. What I’m hearing is that the playbooks you’ve used for the past decade or more are out the window. Finance is now faced with creating a new playbook, on the fly, while reacting to the chaos and constant uncertainty caused by the pandemic.

But in the midst of this uncertainty and chaos, I’m finding that FP&A has been pushed into a more strategic and visible role, especially where cash flow is concerned. And that’s exciting! It’s a privilege and an opportunity. The business is relying on you to answer the tough, important questions required for not just liquidity and visibility, but in many cases, pure survival. You’re also being asked these questions more often and expected to produce answers much faster. And, since the resulting decisions have taken on a new urgency, and can have dramatic effects on future cash flow, the precision of those answers is critical. 

Let me drill down on those three areas down a bit more. 

Importance: Cash has always been king, but during crisis, visibility into, and control over, cash takes on an entirely new level of importance. The pandemic was an unexpected shock that’s impacting businesses and internal units differently, just as it’s changing how external customers and suppliers need to operate. That changes how you’re getting paid, who you’re paying, and how fast that cash is changing hands. Where cash flow used to be an almost secondary concern in terms of planning and forecasting, it’s now taken center stage.

Speed/frequency: Not so long ago, cash flow forecasting and reporting was a structured, periodic task that was just another part of the financial reporting package. It was typically performed on a quarterly cadence from a financial reporting standpoint. Oh how things have changed. You’ve been telling us throughout the pandemic that your C-suite and boards are demanding cash flow updates daily, or even multiple times per day. That’s a huge change, and if your cash flow forecasting and reporting process is manual, it’s a heavy anchor on FP&A’s ability to do anything else.

Like other companies with a retail presence, Bose Corporation was hit hard by the pandemic. Ongoing and localized fluctuations in business reopenings and shut-downs makes cash flow forecasting a nearly continuous task. But, as they explained during our Planful Now Virtual Tour, they’re using Planful to make fast adjustments and keep their plans current. 

“Being able to reforecast quickly and efficiently in the next 12 months is going to be hugely helpful for us as we pivot and redirect the ship with COVID-19,” said Luiz Martinez Luna, Senior Analyst, Corporate FP&A at Bose Corporation. 

Accuracy: It’s not an exaggeration to say that some of your decisions over the past few months have been critical to your company’s survival. That makes the need for accurate cash flow forecasts even more important. We’re hearing more of you moving to the direct method over indirect, which helps you move faster while gaining more tactical and operational accuracy. Some have even been forecasting cash flows down to the contract level, showing the granular precision required to get a complete and accurate picture of incoming and outgoing cash flows down to the dollar. It’s a reflection of the day-to-day reality of business during a pandemic, and it’s hard. 

You’re being pushed to be better in all three areas. For Planful customers, they’re getting through this crisis with the visibility, speed, and accuracy they need to make better decisions. They’re better positioned to quickly inform executives and the board, give the business a higher financial IQ so they make better decisions, and do it all with more accuracy so those resulting decisions are more effective. 

“We are using Planful to do what-if scenario analysis for the BOD meeting,” says Scot Kroenung, Director of Finance and Accounting at UniGroup. “That helps us see what we can realistically predict what the business is going to look like over the next 60 days, assess the impact on earnings and cash. We need to turn this around quickly to be useful, and Planful makes that easy.”

Planful offers the full lifecycle of Continuous Planning solutions, but cash flow forecasting, modeling, and what-if planning are of utmost importance as we all look to rebound from the pandemic. Planful lets you quickly forecast cash flows, using direct or indirect methods, to ensure business continuity and smart allocation of capital. With Planful Now, you can be using Planful in under 30 days.

Watch this on-demand webinar to get a better understanding of how Planful can help. Our product team dives into the Planful solution to show you exactly how cash flow forecasting works, how easily you can tweak assumptions to create on-the-fly what-ifs, and how you can drill down into unit sales or specific customer receivables, for example, to quickly plot out new scenarios.

Planful is built on FP&A experience, so when our customers share with us their stresses, fears, and challenges, we instantly look for ways to help. We know what it’s like to be in your shoes because we’ve been there. You’re telling us that better, faster, more flexible cash flow forecasting is an urgent need. Let us help you get it.