As organisations move beyond the initial shock and interruption of the coronavirus outbreak and past the business stabilisation period, they are starting to ask: What’s next? How can we use what we’ve learned to make us better, faster, more efficient?
While there is still much uncertainty, finance professionals can learn from the last few months as some contours of a post-COVID-19 world are starting to take shape.
In a recent videoconference call, members of the Association of International Certified Professional Accountants’ Americas Regional Advisory Panel shared their thoughts on the most important lessons they’ve learned in the pandemic crisis and how they are planning to use those lessons to move their organisations forward.
Speed and agility are vital. The landscape is changing continuously. No matter the impact coronavirus has had on your business, or the course you are charting forward, organisations need to become faster at gathering data, assessing the information, and making decisions.
Finance departments, including those of the advisory panel members, have reacted quickly in supporting their organisations’ efforts to address supply chain challenges and changing consumer behaviour, along with employee safety and workplace concerns. Some organisations are speeding these processes by building cross-functional executive teams dedicated to regular analysis of their business in this environment.
As we move forward, these agile decision-making processes will be essential to effectively capitalise on the quickening pace of change. Finance departments are well positioned to take on decision-making ownership to deal with sudden change, process information, and react with the necessary speed and flexibility.
Expect the unexpected. The COVID-19 pandemic is without precedent in living memory. Navigating this level of unprecedented disruption means organisations will undoubtedly experience unexpected challenges and outcomes.
For finance departments, forecasting and scenario planning are essential tools for dealing with the uncertainty and many have increased the intensity and frequency of their contingency plan development efforts. However, efforts to deal with the unexpected depend on the quality and frequency of data collection and effective communication with stakeholders, customers, partners, and suppliers. Members of the advisory panel recommended breaking scenario planning and analysis projects into smaller projects, rather than trying to tackle the entirety of the problem, to provide more concrete, actionable advice for executives and to avoid professional burnout.
History helps. Disaster recovery case studies may be a useful resource, as well as lessons learned from the 2008 financial crisis. While these by themselves may not offer a curative, they can, in some circumstances, serve as proxies that finance professionals can turn to for forecasting and planning guidance.
However, our finance professionals cautioned that this pandemic is especially challenging to deal with because of the widespread nature of the global health crisis and related economic collapse. There is also a high degree of uncertainty surrounding the duration of the crisis, especially with the possibility of recurring waves of the virus. This crisis has also had some unusual elements of surprise, driving up reactionary consumer demand for some sectors, while consumer caution prevails in others, not to mention the variable impact of the recent sharp decline in oil prices.
Since the scale and impact of coronavirus is unprecedented, coping with the pandemic requires a mindset shift that previous disasters did not. In some sectors, finance departments may need to be more conservative in their thinking and planning than they would have otherwise been because there is no way of knowing what the knock-on effects of coronavirus will be. For other businesses, the crisis may create opportunities for rethinking supply chains, engaging in mergers and acquisitions activity, or advancing digital transformation efforts.
Remote working seems to be … working. One of the clearest and broadest impacts of the pandemic is the sudden rise of remote working. While there are clearly challenges still to be met, not least of which is the collapse of economic activity, many organisations are finding that the transition to remote work has been surprisingly seamless and not detrimental to productivity. Finance departments will need to assess future workspace needs in light of the relative success of remote working.
Complexity is now an elevated risk. The opaque connectedness of the global system has become a bigger liability in the pandemic. Organisations are finding their business plans, revenue streams, and financial projections disrupted by distant actors and conditions. All along the value chain, organisations are feeling effects from shifts that may not have been as noticeable or as significant prior to the pandemic. Payment processors are deeply impacted by the fall in global retail activity; manufacturers are stymied by supply chain shutdown; food processors are finding ingredient cost rising because of harvest issues and the impact of health concerns on food-processing facilities.
Some organisations are now taking a deeper look at their dependencies and impacts with an eye towards mitigating disruption risk. Our finance professionals underscored the value of their skillset in this process.
Reopening may be expensive. As organisations begin to think about reopening physical stores, workplaces, and facilities, they will have to consider the expense of coronavirus mitigation efforts. Offices, stores, and factories will need to be cleaned and rearranged with new furniture; employees may need to be provided with masks and sanitisers; product-delivery systems may need to be redesigned for social-distancing requirements; new communication technologies may have to be purchased.
Finance departments will need to factor those expenses into future projections and plans to avoid being surprised by hidden expenses in the near future.
Communication is changing. One of the most obvious impacts of the pandemic is the cessation of travel and in-person meetings. With the likely ongoing need to minimise both risk and cost going forward, it will be important for businesses to set priorities for critical communication with stakeholders, partners, customers, vendors, and employees. For the finance professional, networking and partnering with other leaders in the business will also be essential to help set these priorities and maximise the effectiveness of decision-making across the business.
— Andrew Harding, FCMA, CGMA, is chief executive–Management Accounting at the Association of International Certified Professional Accountants. Nate Fredrickson is the regional vice president, the Americas, at the Association. To comment on this article or to suggest an idea for another article, contact Drew Adamek, an FM magazine senior editor, at Andrew.Adamek@aicpa-cima.com.