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CFO

6 Ways A CFO Can Guide Your Business Through The Pandemic

While governments work to safeguard society against COVID-19, businesses must move quickly to protect critical stakeholders and their finances. The abrupt interruption created by the coronavirus pandemic resulted in a global economic collapse. Financial and operational issues happen, and it’s up to business managers and owners to overcome them. While CEOs will use their expertise to steer their firms through difficult times, they will heavily rely on the chief financial officer or CFO inputs to make business financial decisions.

A CFO is a single corporate executive officer or entity who performs the duties of a chief financial officer for a corporation. Many startups and corporations are trying to outsource services to save staffing costs including CFO. Because of this, it increased the amount of virtual CFO services hires rather than hiring a full-time in-house CFO.

Here’s how a CFO could help a company get back on its feet through the pandemic:

  • Analyze The Present Financial Situation

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To get achievements, successful leaders do three things well: set priorities, work with the right people, and manage connections. To keep the business afloat, they would need to pay close attention to cash flow and raise any capital they could. 

The current scenario is difficult for many. Collecting payments from delinquent customers should be a priority to boost the company’s financial status. When working capital is low, CFOs may seek a line of credit, joint ventures, or divestitures to raise funds. They may also desire to seek debt covenant relief. Currently, real-time liquidity tracking is required.

During a crisis, transparent and proactive communication with investors and boards is critical. The first several months are crucial for increasing communication frequency and transparency, and the CFO is responsible for this.

  • Implement Cash War Room

Cash is king in uncertain times, and liquidity is vital. Also, future financial shortages aren’t just a concern, but a reality for many.

To enforce strong expenditure controls across firms, CFOs need to create a cash war room. Customer payment delays require organizations to keep track of their cash on hand, as well as any additional capital they acquire, and CFOs to understand how all those assets are being utilized. CFOs will realize when working capital isn’t sufficient anymore. Finance leaders will require reliable technologies to give actionable knowledge that drives the organization. Establishing a cash war room is a smart starting step.

  •  Improve Productivity Through Digitalization

To cope with the pandemic, many people may need to work remotely, utilizing digital collaboration tools. But the finance team’s use of technology to assist the company is not exceptional. Automated closings and real-time predictions are now possible. After the crisis, the CFO and finance team will push for enterprise-wide digitalization. Financial tools like the cash war room, rolling forecasts, and collaborative dashboards can benefit the entire firm. In future emergencies, reliable reporting, informed decision-making, and company continuity are important.

CFOs undoubtedly have a lot on their plates. Modern software can solve many of the CFO’s greatest difficulties. Enterprise resource planning or ERP systems, for example, include modules for financial management, production, procurement, supply chain management, warehouse, and fulfillment. In addition, reliable, robust data combined with real-time speed and strong analytic tools assist CFOs and their teams offer the correct information at the right time for sound decisions.

CFOs will manage creative company strategies. Giving the right people the proper technology and data to manage risks, achieve compliance, and drive their enterprises to innovative growth is their biggest challenge.

  • Succeed In The ‘Next Normal’

A CFO must plan for a transformation mindset when allocating corporate resources if they want their business to prosper following a devastating economic crisis.

The CFO’s team should assess the company’s investment portfolio and focus on each business unit’s maximum potential.

During the previous economic crisis, resilient corporations divested 1.5x more than non-resilient companies. During a recession, profitable organizations can benefit from mergers and acquisitions. This may improve a company’s investment in mergers and acquisitions or M&A.

Remote working has become popular and productive for many firms since the COVID-19 outbreak. After the crisis, most companies should continue the practice. When the pandemic problem is over, CFOs should check the financial implications of a digital workforce. The CFO team can help the entire company and its subsidiaries scale financial predictions and collaborative dashboards.

  • Reassess Investment And Strengthen Balance Sheet

During a crisis, CFOs should examine goodwill impairments, reduce inventory, refinance debt, lower accounts payable and receivable terms, and so on. Balance-sheet cleaning can increase financial flexibility while keeping everyone focused on essential indicators during a tumultuous period. CFOs should help peers examine important R&D, IT, and capital allocations to improve the company’s investment portfolio. The pandemic is quite likely to have altered business units’ initial estimated returns on investments.

  • Manage Profitability

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In the short term, companies are looking at their costs to flex and cut them. When the market takes up again, the challenge will be to balance cost reduction with rapid expansion. Critical resources may have been underestimated to the point that they cannot support future growth.

Finance should look at both sides of the profitability equation to avoid this error. Actions to reduce costs and generate revenue should be prioritized. Desperately seeking higher profit markets or goods, firms could shift resources. To minimize over-discounting by salespeople who are eager to make a sale at this difficult period, sales support could be focused on monitoring pricing.

Moreover, the analysis should probe the business, the operating model, the added value of activities, the sourcing model (in-house or outsourced), the demand/supply chain network setup, and so on. The CFO should aim high for a business-wide transformation. Now is the time to rebuild the fundamentals, to completely revamp the business model, and to prepare for the competition that’ll follow once we all emerge from this catastrophe.

Conclusion on Having a CFO

The CFO will keep all employees informed of the company’s crisis management plans. Effective communication dispels rumors, keeps staff focused and motivated. When planning initiatives, CFOs must evaluate both the best- and worst-case scenarios. No one knows how this global crisis will end, so they must consider all stakeholders, suppliers, customers, and employees.