CFOs: Planning for Recovery

Written in collaboration with @Michael Lane

We are still in the midst of the Covid-19 pandemic, but at many companies, CFOs are beginning to transition out of a crisis mode to planning for the medium- and longer-term in order to prepare for an eventual return to a new normal. The restart scenario will vary by company and industry: For some, the coronavirus pandemic has had a dramatic and negative impact on sales, whereas others experienced a rise in revenue, at least in some parts of their business. Regardless of the specific situation, however, everyone needs to start looking ahead, and consider the following two questions:

  1. What are the likely long-term effects of the crisis on finance strategy and operating model?
  2. What are the major challenges we will face as the company reemerges into a stead-state mode?

The Long-Term Impact

The events of the past several weeks required an immediate finance response, but going forward, finance executives should evaluate what the crisis means from a strategic and operating model perspective. Some critical questions to ask:

  • How can we further simplify, standardize, and automate our finance processes to increase our agility?
  • Should we migrate more activities to global business services (GBS) organizations in order to become more efficient, reduce process complexity and build in redundancy in case of staff shortages?
  • How should we handle our business process outsourcing (BPO) model based on learnings from the crisis (some BPOs took several weeks to build-up remote capacity), e.g., diversify locations, ensure capability to work remotely, to hedge against future global events?
  • How can we continue to embed should virtual and collaborative technologies in our operating model to enhance our agility and improve employee engagement?
  • What capability gaps became evident during the crisis and which are priority gaps to close?
  • How can we intelligently reduce our steady-state G&A costs without affecting service quality.
  • How can we free up more cash in the business to help fund targeted investments
  • How will the crisis affect the frequency and manner of communication with external stakeholders?

Major Challenges

As finance returns to a new level of steady-state operations, CFOs may face the following recovery hurdles:

  • Capacity constraints when gearing up for greater demand for services and a rise in transaction volume, given workforce reductions and supply chain disruption.
  • Ability to accurately forecast the return of market demand for company products and services
  • Liquidity constrains (including long-term issues with accessing the capital markets or bank loans) that will affect the ability to withstand a potentially prolonged recession or support enterprise growth by funding new opportunities.

Nilly Essaides

Senior Research Director at The Hackett Group

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