Due to the current crisis, we find ourselves in, multiple business sectors are reporting billions in lost revenue. While every sector will be affected to varying degrees— no matter the industry and the impact that COVID has— organizations need to be able to navigate the current times while also positioning themselves for recovery. During this unpredictable time, CFOs will be relied upon to take a lead role in addressing any pressing concerns and provide actionable insight to drive critical business decisions.
However, in order to do this, the office of finance needs to make some changes. If you’re like the 33% of companies surveyed in a recent study, you weren’t prepared for the new normal of a remote workforce, and that level of unpreparedness could spell disaster for your reported financials and your ability to guide the organization.
Below you’ll find three changes that organizations need to make in order to take control of the current health and economic crisis that we’re all navigating together.
Though this step might be considered rudimentary, this is a time in which offices of finance are forced to become more geographically fragmented and communication is more important than ever. As employees become more dispersed, their calendars are filled with meetings to check on the status of tasks critical to the close process. Typically this would be accomplished by walking over to a team member’s desk or a quick chat in the office, but it now fills up multiple half-hour to hour-long meeting slots. This quickly eats up the remainder of time that accountants have to complete the tasks that they are assigned. To keep up with the new demands that the organization will require of the office of finance, employees need to be empowered by tools that promote communication and productivity, not crushed by constant meetings.
Explore “What If” Scenarios
During this period of uncertainty, organizations can’t rely on the frameworks and strategies that they previously developed. A recent report by McKinsey suggests that instead, CFOs need to create a range of scenarios that encompass multiple different eventualities. For example, consider the potential paths this current crisis might create, which parts of your organization will be impacted the most and what level of recovery within your company can you expect depending on how long this lasts. By playing through these scenarios, companies will be better prepared for the fallout of these unprecedented times.
Implement a Cash War Room
In times of uncertainty, not only is cash king, but the importance of liquidity has never been higher. Additionally, cash shortages in the upcoming future aren’t just a possibility, but a likely reality for many.
The McKinsey report states that, in order for CFOs to implement aggressive curbs on spending throughout organizations, they need to launch a cash war room. With events like customers delaying payments, companies need to have a high-level view of their cash on hand, along with any incremental capital they access, and CFOs need to be aware of how those resources are being leveraged. By being aware of the details of your financials, CFOS will know when working capital is no longer sufficient, and options like tapping lines of credit and investment opportunities, such as divestitures or joint ventures, become the best course of action.
Finance leaders are going to need reliable tools at their disposal in order to provide actionable insight that leads the organization. Setting up a cash war room is a great first step in centralizing that decision-making process.
How To Set This Plan In Motion
While these changes are incredibly helpful for organizations, if you’re like the previously mentioned 33% that were unprepared for the work environment shift, you won’t have time to make them. Before this crisis, your typical close process was conducted with spreadsheets and various forms of manual processing. That approach was time-consuming before and only became more complicated as workforces dispersed geographically. Due to this, offices of finance struggle to close their books on time and have very little time— if any — to provide any kind of insight or analysis of the company’s financial position.
To overcome the current crisis, the same level of transformation that is taking place in the world needs to take place in the office of finance. By leveraging automation, organizations can invest the time typically spent on manual processes into providing actionable insight into how the organization as a whole can navigate the current economic environment.
To learn more about how financial automation can improve your remote office of finance, visit our remote workforce resource page to download our eBook: A Quick Win to Improve Remote Finance Processes.
Written by: Caleb Walter