MESANA finance leaders' COVID-19 crisis insightsCIMA panel members in the Middle East and South Asia share ideas and actions underway in response to the impacts of the coronavirus.
As the coronavirus pandemic continues to systematically alter business environments across the world, it is useful to consider what other economies, sectors, and industry peers are doing.
In a recent videoconference, CIMA’s Middle East, South Asia and North Africa (MESANA) regional advisory panel shared a number of concerns and actions underway in their own organisations and other businesses in the region.
Business leaders say companies are increasingly aware that when populations return to work and stores reopen, their economies and industries will look very different. The following themes emerged from the discussion:
Top of mind for senior executives continues to be the need to make cost savings in the business. Declining revenues are impacting companies’ abilities to meet financial obligations, including employees’ salaries and dividend payouts to investors. Some actions that have been taken include putting employees on furlough or unpaid leave and salary cuts for all levels, including upper management and the board.
Companies, however, fear losing talent that will be difficult to rehire after the pandemic due to these cost-cutting measures. This may also affect how quickly they can ramp up activities in the upcoming recovery phase. Finance leaders are also continually assessing multiple recovery scenarios and what further cost-reduction measures are needed.
Digitalisation and finance team restructuring
Despite the economic fallout, companies are finding new opportunities by changing their business models, products, and moving to online sales channels. For instance, tourism companies pivoted and started offering deliveries for food and other essentials; education companies started offering online classes.
For finance teams, increasing efficiency is a top priority. Measures include creating leaner teams through restructuring, centralising finance functions, improving automation capabilities, and reskilling remaining employees to cover a wider number of tasks and roles. Finance teams are also studying businesses in other regions that have leaner structures to apply the learnings in their own functions.
Digitalisation is emerging as a vital feature for companies’ futures. Businesses are looking at overall service lines to digitalise processes that are still manual. Companies that don’t have online tools to track work progress are implementing human resource systems and remote-work management systems.
One thing is clear: Businesses are moving away from traditional structures and ways of doing business.
Helping countries and industries recover
The pandemic has resulted in systemic impacts for certain industries, including tourism and hospitality, oil, and export-oriented manufacturing. The disruption to supply and value chains may significantly alter supplier and vendor relationships after the pandemic. Oil-producing Gulf countries heavily reliant on revenue from the oil trade, and Sri Lankan apparel manufacturers dependent on the US and Europe as export markets have also been severely affected.
The immense scale of the current crisis means that companies need to also look beyond their own operations, to the macro environment. Businesses are looking at ways to help one another to support the recovery of whole industries and countries. In India for example, migrant workers are travelling back to rural areas in search for alternative employment in the agriculture sector. When the lockdown lifts in India, getting vast numbers of people back to work in industries will require a collective effort.
Another consideration is helping governments get people back to work in phases and to assist in the planning of countries’ economic recovery.
Reskilling and upskilling
The consensus is that companies will not go back to the ways of working before the coronavirus. Finance professionals said they’ve had opportunities to work much closer with their leadership teams to assess business impacts, create scenarios, and manage the business. These new opportunities to strategise and influence decisions will require new skillsets.
For management accountants, this is an opportune time to upskill and prepare for the new emerging business environment. It’s no longer about looking backwards and preparing reports to explain what happened. Rather, it’s about planning the future of the business.
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 Venkkat Ramanan, FCMA, CGMA, is regional vice-president–Asia Pacific, both at the Association of International Certified Professional Accountants. To comment on this article or to suggest an idea for another article, contact Alexis See Tho, an FM magazine associate editor, at Alexis.SeeTho@aicpa-cima.com.