Make Cash Management a Competitive Advantage

Everyone in Finance has been beating the drum of cash preservation since the pandemic first hit the news cycles. Now, many months later, if cash remains king, uncertainty is surely queen. Getting a handle on your cash flow is the job of FP&A, but with so much continuing change, the business is relying on you for financial accuracy, speed, agility, and vision to keep your company moving forward.

I recently presented at the Amalgam Insights TEM Expo 2020, an event designed to help Finance better manage IT resources in the midst of remote work and digital transformation. The pandemic has forced FP&A to reevaluate every penny. But, with respect to IT projects, we’re seeing more evidence that companies that continue to invest in transformational technologies are not just weathering the COVID storm, they’re positioning themselves to lead as the world emerges from this crisis. A key to FP&A success is using these technologies to provide the business with better visibility into cash flow.

As CFO of Planful, I’m a big proponent of enhancing our competitive advantage through cash management. That was the topic of my session at TEM Expo, but whether you’re still struggling to overcome the impact of the pandemic or you’re already looking towards 2021, cash flow management and transparency can make a difference. CFOs and FP&A know we need to prepare for a wide array of possibilities because everything is still in flux. But, providing the business with better cash flow visibility during uncertainty gives them the confidence to make decisions and move forward with decisiveness.

So how do you get there? You can watch my TEM Expo presentation, but to summarize, I believe there are three foundational prerequisites FP&A needs to turn cash management into a competitive advantage:

The role FP&A plays in your business recovery.
Your ability to quickly respond to the business.
Getting beyond today’s chaos to prepare for tomorrow.

#1 – Put FP&A in the Driver’s Seat

FP&A spends a lot of time on the manual tasks of finance, but that’s a time sink you can no longer afford. The level of uncertainty today leads to constant reforecasting, remodeling, replanning, and repeating all of it. It wasn’t that long ago when companies were looking at cash flow on a monthly or quarterly basis. Today, it’s weekly or daily. When FP&A is bogged down in the manual weeds, your resulting guidance is neither accurate nor timely.

I talk to a lot of CFOs and CEOs at our customers and those evaluating Planful. What I’ve heard again and again in 2020 is that they need accuracy and speed from Finance. Everything is changing quickly, so they need real-time data that’s as accurate as possible so they can make decisive, confident decisions in an instant. That means FP&A is being asked to do more, faster, and, unfortunately today, maybe with less resources. You can’t keep up with those expectations if you’re relying on spreadsheets.

Before the pandemic, I used to build good, better, and best cash flow scenario plans. Now, they’re more like OK, worse, and “sky is falling.” That’s just the situation we live in. Since we use Planful, however, we’re always working with accurate, timely information. We can dynamically collaborate with our business partners, and we’re confident in the recommendations and decisions we make. So the business looks to us for guidance.

FP&A has a great opportunity today to get in the driver’s seat, take the wheel, and give the business what they need: more updates, more reports, and a better understanding of your cash flow situation. Without the proper tools, you’re in a constant state of reaction and you’re likely days or weeks behind what the business needs. In today’s reality, that lag could be catastrophic.

A rock solid cash flow plan, built on current data and today’s situation, gives everyone across the business the confidence to make decisions and move forward, quickly.

#2 – Put Speed and Agility Above All Else

Yes, everything is changing at a breathtaking pace and uncertainty is the only known. You’ve heard that a thousand times since this pandemic began. But it remains true and it should be driving how you run FP&A. In other words, speed and agility mean more than anything right now.

What the business needs is for FP&A to forecast, model, plan, and then reforecast, remodel, and replan, and then repeat. Repeatedly. Being able to do this in a few clicks is, obviously, better than having to gather new data, integrate spreadsheets, tweak formulas, check and double check…you get the point. Providing these scenarios to the business quickly lets them respond to what they’re reading in the market. Accurate cash flow insights can then drive real value for every corner of your business.

Also, don’t fall into the trap of thinking you can’t spare the time to modernize FP&A. This current situation won’t be over next month and then everything is back to normal. It’s been many months since this began, and the uncertainty is likely to continue for at least another year, likely longer. Taking a few weeks now to accelerate and increase the accuracy of your processes is a no-brainer. Just imagine how you’d be working today if you spent last month moving to a connected, collaborative, modern Continuous Planning platform.

#3 – Start Planning for Tomorrow

This might be a byproduct of my Boy Scout days, but I follow the “Be Prepared” motto, especially in Finance. Keeping an eye on the road ahead, and constantly updating your forecasts and plans, helps you weather any oncoming storms. Thinking through the scenarios helps you develop potential responses. If the scenarios do then happen, you aren’t simply reacting, you’re executing a known plan.

It’s also important to take an ecosystem view as you do your cash flow scenario planning. Forces that impact your business will likely impact your customers, suppliers, and partners as well. Extended payment terms are one result of the pandemic. But what’s next? Will more customers request even longer extensions? Will the extensions be permanent? Will new types of COVID clauses be added to contracts, and will they impact cash flow?

Planning for these potential scenarios puts you in a better position to respond when they do, or even if they don’t, come to pass. Going further and working with your ecosystem to have candid conversations about these scenarios and the cash flow impact can also create goodwill. That will pay dividends with those customers, suppliers, and partners for years to come.

Take the Lead to Emerge Intact

FP&A is in a unique position to lead your business through this current crisis. With better cash flow management and planning tools, and a move towards Continuous Planning, you’ll get the speed, agility, and responsiveness your business needs to deal with current and coming threats and opportunities.

Use smart cash flow management to chart your course, move fast while increasing accuracy and flexibility, and proactively prepare for tomorrow. Make this your mantra for post-pandemic business success. And remember, we’re in this together!

Want to learn more about how you can put FP&A in the drivers seat?

Download our Ultimate Guide to Continuous Planning.