COVID-19 has undeniably changed the course of the business universe. CFOs are grappling with the possibility of an impending recession looming over their heads. In addition to the usual responsibilities, all the top management needs to proactively tackle all the issues the pandemic has caused.
Let’s quantify the damage COVID-19 causes us: –
- The global statistics of coronavirus patients stands at 47 plus lakh on 18th May 2020. Almost 3 plus lakh people have surrendered to this pandemic.
- In the previous six weeks, more than 30 million people have claimed unemployment benefits in the US.
- Many advanced western countries will go in recession in 2020.
However, CFOs can still save their businesses by focusing their attention on these key business areas.
1. Managing Talent Risk
Managing talent during this pandemic is especially challenging for technologically less-savvy companies. However, their technologically-skilled competitors have moved to a virtual model to keep running the operations safely. This sudden change has forced CFOs to improvise their policies to accommodate business objectives through the crisis. However, some challenges still require your staff to come to the location. If your staff still comes to the office, you also need to ensure your employees are safe and don’t catch the infection. CFOs need to learn to tackle these risks to prevent major projects from being disrupted. Also, CFOs should be able to mitigate huge staff attrition and ensure relative normalcy in operations.
How CFOs can facilitate change?
CFOs can facilitate better collaboration among employees to ensure operations are run as a business as usual. Several networking tools will help you track your team’s processes and challenges. For the safety of your employees, CFOs can instruct their decision-makers to come up with critical safety guidelines to enforce strict standards. In addition to that, the CFOs team can come up with a schedule to ensure there’s no disruption in normal operations.
2. Forecasting and Scenario Modelling
The effects of the COVID-19 pandemic are still unclear and unpredictable. Whether the crisis will end soon or prolong for years, we cannot forecast. If this crisis lasts longer, we don’t understand the influence it will have on our industries. This fickle pandemic makes scenario planning and predictive analyses even more important.
How CFOs can push through the tough times?
Using several scenario planning capabilities, your company can proactively build prediction models and forecasts to calculate business damages. Being aware of the impending challenges will help CFOs prepare themselves and their teams for the future. Also, a responsible CFO ensures the team is ready for all shifts in strategic and financial decisions by clear and concise communication with them.
3. Ensure Supply Chain and Operational Resilience
The rise of coronavirus has put immense stress on the normal supply chain operations. Currently, the lack of liquidity makes it difficult for companies to pay their vendors. Subsequently, delayed payments complicate vendor operations and impede their abilities to continue providing their usual support.
How CFOs can tackle it?
CFOs can use the liquidity control tower for and early detection of supply chain risks. This type of predictive analysis helps tackle issues related to dependencies on key suppliers by finding alternate affordable suppliers that provide similar products in your locality.
4. Bolster Liquidity
One of the topmost priorities of a CFO is to maintain enough liquid cash for their company to run operations. Financing costs have risen with global inflation and thus, CFOs also need to ensure their cash reserves can last them for at least a few months during the crisis. The sudden plunge in global stock prices also has the CFOs worried. CFO’s responsibilities also include stabilizing market volatility and predicting future income.
How CFOs can maintain liquidity?
Several central banks are injecting capital in the credit markets to improve liquidity. Various government schemes have announced great stimulus packages for small and medium scale businesses. Using the liquidity created by central banks helps CFOs stay on track with payments. Borrowing from the market is also a great way to maintain cash flow reserves for your company.
CFOs have a huge responsibility to keep the company running. COVID-19 has only increased your duties towards your stakeholders and employees. Ensure you have strong collaborative channels with all your key people and regularly connect with them. Also, find a way to improve your services through this crisis and provide specialized services to your customers. You’ll surely be able to retain your customers and grow your business.