Finance leaders across industries and geographies are emerging from a year that tested their mettle. The lessons they learned while doubling down to help businesses survive the economic and health impacts of the coronavirus pandemic were as wide-ranging as their plans to leave the pandemic behind in 2021.
Fifteen of them shared their experiences and aspirations with FM magazine and talked about, among other topics, rebuilding revenue streams, budgeting and forecasting approaches, and growth opportunities they seized. All of their insights in Q&A formats can be found at A Year of Evolution: CFOs on 2021.
What connected the insights was general agreement on how important agility has become across the organisation and how the pandemic accelerated digitisation and automation in the finance function. Several of the finance leaders also talked about business opportunities the pandemic presented. A compilation of insights from the Q&A series highlights four of them.
How suddenly and quickly businesses and their finance teams had to deal with the economic impacts of the coronavirus pandemic in country after country is something finance leaders around the world will not forget anytime soon.
Asked about the most important lesson learned, several finance leaders echoed Amy Lam, FCMA, CGMA, who said she learned to appreciate agility. Lam is the finance director at Hong Kong Air Cargo Terminals Limited, also known as Hactl, which operates within the Hong Kong International Airport, the world's busiest airport for cargo.
Th ability to adapt quickly to challenges arising out of the pandemic bolstered businesses in various ways:
Cost optimisation. To Lam, it is the top priority in 2021. Economic ups and downs determine the volume of cargo moving through the Hong Kong International Airport, which is Hactl's top line. Economic downturns tend to hit that top line immediately, which makes protecting profit margins essential to continued success after 44 years in business, Lam said.
The pandemic impressed on Hactl's senior management that complacency is not an option, she said. "We decided to transform ourselves by taking a thorough look at our cost structure and processes and engaging consultants to help us with that."
Forecasting, budgeting, and planning. The pandemic showed how important it is to adapt finance processes, such as the traditional annual planning process, to rapidly changing circumstances, said Virginie Lafougere, ACMA, CGMA, CPA (Australia). Lafougere is CFO of Movember, an Australian not-for-profit with operations worldwide. Movember is best known for annual fundraising campaigns during the month of November where men or "Mo-Bros" grow moustaches to raise awareness of men's health issues, including men's mental health, suicide prevention, prostate cancer, and testicular cancer.
Movember switched from annual to quarterly budgets and is considering its planning cycle for fiscal year 2021, which starts in May.
Other businesses also adapted their planning and forecasting. In South Africa, British-Dutch multinational consumer goods company Unilever went from monthly to weekly meetings, said Mikateko Tshetshe, FCMA, CGMA, vice-president of Finance Africa at Unilever. In Nigeria, Oluseyi Olanrewaju, FCMA, CGMA, is considering switching from an incremental to a zero-based budgeting approach to improve assumptions and targets.
"Finance professionals are now expected to make their strategy evergreen and allow for greater flexibility because the landscape is changing more quickly than anyone could really imagine," said Olanrewaju, who is CFO of Mixta Africa, a real estate development company based in Lagos.
Channels and pricing. Worldwide lockdowns shut many brick-and-mortar stores and drove consumers to shop online, accelerating a retail trend towards e-commerce. Businesses like Hanesbrands, a US-based apparel maker, UK and Ireland retailer B&Q, and Hindustan Unilever Limited (HUL), a Unilever subsidiary in India, quickly adapted by concentrating on and investing more in e-commerce channels.
"We're really making sure we're investing in the right places, from our tools to resources and people to be in the place where our consumers are," said Scott Lewis, CPA, interim CFO and chief accounting officer at Hanesbrands. "That's critical for us as we move forward as a company."
HUL also adjusted pricing, applying different prices according to location, consumer segment, and channel, said Srinivas Phatak, the CFO and executive director of finance and IT at HUL. "We realised consumers were willing to buy our well-known products in health, hygiene, and nutrition, but in the discretionary segments, consumption took a hit," Phatak said. "We knew that we must review this challenge through a different consumer lens, a different portfolio lens, and a different market lens."
Going digital and accelerating automation
The pandemic not only forced finance teams worldwide to work from home, it also challenged them to quickly come up with financial information that could help manage economic impacts threatening businesses' survival. A year on, finance leaders said digitisation and automation of the finance function have been crucial to tackle the pandemic challenges.
In this time and age, rapid information and extremely pertinent analytics enable business leaders to make key operational, tactical, and strategic decisions, said Haifa al-Khaifi, FCMA, CGMA, the CFO of Petroleum Development Oman, the country's largest oil and gas producer. PDO has digital transformation projects to better manage its supply chains, vendors, materials, contingent workforce, and shared services, al-Khaifi said. "These projects are a key foundation toward our 'fit for the future' strategy."
In many companies, digitisation and automation efforts of the finance function had already been underway. The economic and health impacts of the pandemic accelerated these efforts, including at Hanesbrands, Hactl, Unilever's Finance Africa, Indonesia's leading automative parts maker and distributor Indoprima Group, and Chinese home appliance giant Haier Group.
Triumph Power and Gas Systems Limited is moving its financial system workflow to the cloud, said Japheth Jev, ACMA, CGMA, the CFO at the energy servicing company based in Lagos. "This crisis and the first lockdown forced us to renew our commitment to digital transformation," Jev said. "We have increased our budget for technology, especially cloud-based technologies that can be accessed anywhere."
Other businesses accelerated moving ERP platforms to the cloud to allow for remote working and installing robotic process automation to free finance team members up for data analytics and business partnering.
RHB Bank in Malaysia invested heavily in its IT infrastructure before the pandemic, which helped the bank manage the financial upheavals and positioned it for the future, said Syed Ahmad Taufik Albar, FCMA, CGMA, RHB's CFO. This IT infrastructure, which customers don't see, is the bank's engine, he said. "This would enable us to take the next step, which is applying machine learning and artificial intelligence in our applications, which in turn will help us better address cyberthreats, give us a better platform to address fraudulent attempts on our customers, and can really propel RHB forward in the coming years."
Seizing growth opportunities
The pandemic has challenged many businesses, but it also presented opportunities for growth. Here are four examples:
- RHB Bank in Malaysia tapped into the higher demand for wealth management, Albar said. It's a side effect of central banks keeping interest rates low, he added, but it happens to also align with RHB's longer-term strategic focus. Also, the bank's brokerage business benefited from people investing more into the stock market, which experienced a boom in trading volume in the fall of 2020.
"But to me, the biggest positive this crisis has given us includes a major leap forward on our readiness to cope with disrupted operations and also the way it energised our efforts in the digital space," Albar said.
- Gousto, a company that delivers ingredient and recipe kits to UK customers' homes, in the midst of the pandemic established itself as a dollar unicorn with a valuation in excess of £770 million, after it raised new equity funding of £25 million from existing investors.
A data-driven approach helped Gousto continue to ride high as other food businesses struggled. Going into 2021, the company is expanding, increasing its fulfilment capacity, and accelerating hiring plans.
"We've actually benefited as people have sought out a convenient, quick, healthy way to eat, avoiding the trip to the supermarket, avoiding seeing people in the nicest sense," said Stephan Burow, ACMA, CGMA, finance vice-president at Gousto.
- Argility Technology Group, a South African software provider, offers a lot of supply chain and retail products, which are product lines in demand as businesses accelerate digitisation and automation during the pandemic.
"More businesses are realising they can't run their businesses on Excel anymore and that they need systems like warehouse management," said Richard Knight, FCMA, CGMA, Argility's CFO. "Our fleet management system has also really picked up in terms of interest and deals. … Even a few of our newer products, like one that's focused on last-mile delivery, have really gained a lot of traction in the retail and supply chain space."
- Qlik has also seen demand for its digital tools increase during the pandemic. The US-based software company helps customers around the world tackle complex problems through the use of data analytics.
The primary focus in 2021 is bookings growth and taking market share, said Dennis Johnson, CPA, the CFO of Qlik. "When we see a particular market where we can add sales capacity and drive bookings, we're going to do that, and despite the pandemic we've done that. … We think that when the pandemic ends, we're going to come out of this on a really strong footing."
— Sabine Vollmer (Sabine.Vollmer@aicpa-cima.com) is an FM magazine senior editor.