Opinions CFOs: Planning for Recovery July 21, 2020July 21, 2020 Nilly Essaides 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: What are the likely long-term effects of the crisis on finance strategy and operating model? 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.