5 ways to navigate the COVID-19 crisis

Finance professionals in many markets are playing a pivotal role in helping their organisations to navigate the COVID-19 crisis. The actions they take at this time, and the advice they give to management, can potentially make all the difference as to whether or not their organisation emerges from this crisis intact.

When they are juggling so much, and have so much information to absorb, how can finance professionals ensure they are focused on the right priorities? Fortunately, they can learn from their peers in China who are now coming out the other side of the crisis. In a recent videoconference hosted by CIMA, eight members who are Chinese finance leaders shared their perspectives. Five important themes emerged:

Protect cash. “Cash is king” might be a cliché among finance professionals, but this cliché is now more relevant than ever before. The Chinese finance leaders that we spoke to emphasised that cash preservation was critical to enabling their organisations to survive. They explained that alongside the protection of people, the top priorities for finance professionals during this time should be to minimise spending, hold off capital expenditure, freeze headcount, and secure credit if it is needed.

Reprioritise. In a rapidly changing environment, it is essential that finance acts as a business partner to the organisation. This entails working with departments such as operations and marketing to refocus the organisation’s strategy and its marketing plans. Once finance understands how strategy has been affected by the crisis, it can help the rest of the business to ensure that money is spent in the right areas. It can also undertake financial modelling to support top-line growth.

Plan for different scenarios. No one knows quite how the COVID-19 crisis will play out or what the nature of the recovery will be. On the one hand, we might see a sharp recovery and a fairly rapid return to business-as-usual conditions. On the other, there might be waves of infection later in the year that cause economic conditions to deteriorate further. In light of this uncertainty, finance professionals should plan for best-case and worst-case scenarios with regard to customer demand and sales, as well as the supply of raw materials. They will then be able to forecast how these scenarios could impact their organisation’s cash flow. It is also important to develop a list of actions to mitigate the risks that arise in different scenarios.

Wear a commercial hat. When confronting the COVID-19 crisis, finance professionals should take a broad commercial perspective and not focus solely on cost cutting. That means helping to identify trends, such as changing consumer behaviours, or suggesting new products or services that could enable the organisation to develop innovative, digitally based revenue streams.

Embed crisis-related behaviours in business-as-usual practices. The COVID-19 crisis has forced organisations to operate differently — for example, by replacing face-to-face meetings with videoconferences. These new ways of working can be very cost-effective and good for organisational productivity. Finance professionals should consider how they can embed them within their practices in a post-crisis world. For example, should they recommend that, going forward, staff cut back on nonessential travel and work from home, at least some of the time? This might help the organisation to control better its costs during the recovery phase.

Clearly, the workload and pressures involved with crisis management make this a very challenging period for finance professionals. As our Chinese finance leaders showed, however, this period can also enable them to shine. By helping their organisations withstand the current crisis, finance professionals will derive personal satisfaction from making a difference and further enhance their reputation as business partners.

For more news and reporting on the coronavirus and how management accountants can handle challenges related to the pandemic, visit FM’s coronavirus resources page.

— Andrew Harding, FCMA, CGMA, is chief executive–Management Accounting, and Vicky Li, FCMA, CGMA, is regional vice-president–North Asia, both at the Association of International Certified Professional Accountants. To comment on this article or to suggest an idea for another article, contact Oliver Rowe, an FM magazine senior editor, at Oliver.Rowe@aicpa-cima.com.