5 tactics to plan your way through the pandemic in 2021
Many businesses are taking creative approaches to pandemic planning as they brace for a rocky ride through 2021, according to a virtual roundtable organised in 2020 by the Controllers Council, a US group of controllers, CFOs, and finance professionals focused on best practice.
Agile, short-term thinking is a priority as companies shred their long-term plans and grapple with the day-to-day realities of continued lockdowns, changing work patterns, and economic conditions still affected by the pandemic, roundtable speakers said.
“We’re clearly on a quarter-to-quarter plan,” said Mike Whitmire, CPA (inactive), co-founder and chief executive of FloQast, a Los Angeles-based accountancy software firm. “We still have three models. There’s a doomsday scenario, there’s what we think is going to happen, and then there’s a best case. We play in the middle.”
Tactics to tackle 2021
Regulators in several countries approved vaccines, and immunisation against the coronavirus started in December. The vaccines have shown to be highly effective in clinical trials, but the pandemic is not expected to subside for several months.
To plan for pandemic uncertainty and risks in 2021, speakers at the Controllers Council roundtable suggested to:
Become agile. Focus on flexibility rather than painstakingly crafted, multiyear plans. Historical performance is of little help when it comes to making predictions for the pandemic, so finance teams should look instead at how businesses have fared over the last three or four months.
Adopting an agile methodology, which is often used in software development, can make it easier to plan from quarter to quarter.
“Use some of those agile techniques to be able to respond quickly to some of the changes that are happening. Some of them could be positive; there are opportunities out there,” said Jim Treleaven, president and chief executive of Via Strategy Group, a Chicago-based management consultancy.
Deepen your operational knowledge. Finance executives need to better communicate with customers and find out how their businesses really operate. Especially in manufacturing, they may have to leave the comfort of their offices. By talking to line managers, they can glean valuable insights into the everyday factors affecting the company’s performance.
Learning the story behind the numbers can also be a useful way to discover what support people throughout the company need to reach their performance indicators.
Manage your cash closely. Companies have slashed costs and cut back on spending to help survive the economic and health impacts of the pandemic. They should be cautious about ramping up spending again too soon.
Going into 2021, Ted Weitzel, CPA, former senior vice-president for finance and operations at a US-based tech company, emphasised the need for strong internal communication. “No. 1 is buy-in from your senior leaders, helping them understand that capital might not be on the table, helping them change their mindset on how they grow businesses,” he said.
Despite raising $40 million at the start of 2020, FloQast has decided to not to bring new staff on board until annual recurring revenue per full-time employee rises to cover the additional cost, said Whitmire, who remains concerned about cash preservation.
Look ahead. In fast-changing conditions, it is imperative that finance teams have the latest information at their fingertips to help executives make changes on the fly.
“You’ve got to be delivering your financial information faster than ever before so that the leaders in the company can use it to make decisions,” Weitzel said.
Be proactive. If indicators show a company is struggling and on track to miss key targets, it is imperative to talk investors through the crisis.
“The best advice I’ve received in this agile budgeting world, if something is going south, you want to just be proactive about that and not wait until the next board meeting to bring that up,” Whitmire said.
— Sophie Hares is a freelance writer based in Mexico. To comment on this article or to suggest an idea for another article, contact Sabine Vollmer, an FM magazine senior editor, at Sabine.Vollmer@aicpa-cima.com.