Amid Global Market Uncertainty, CFOs Can Still Act Decisively
Disruption from the global outbreak of the novel coronavirus has rippled across industries, markets and economies, feeding into unprecedented levels of corporate uncertainty. For the chief financial officer, managing cashflows and navigating through this rapid and radical market volatility will be an increasingly uphill battle for the foreseeable future.
While businesses scramble to develop and deploy contingency plans in real-time, CFOs are tasked with mitigating their organization’s exposure, understanding risk to their fiscal outlooks and developing projections for long-term impact without a clear recovery timeline. PwC’s COVID-19 CFO Pulse Survey found that finance leaders are bracing for an economic downturn, with 80% of respondents identifying a potential global recession as their top concern with respect to COVID-19.
As market turmoil and rapid change continues, a CFO’s ability to remain confident and act decisively will be tested and having the agility to simultaneously pivot strategically and operationally will prove critical for continuity.
“CFOs are already managing a complex set of accounting and finance responsibilities,” said Sara Baxter Orr, Global Head, CFO Practice at Anaplan. “With the outbreak of the novel coronavirus and global market economic shifts, finance leaders are under an immense amount of pressure to make strategic decisions based on increasingly changing dynamics.”
Achieving this level of agility requires gathering and analyzing large quantities of data that change rapidly, a feat that many financial tools and solutions are not adequately equipped to handle.
“To stabilize cash flows, CFOs across industries are making tough decisions in a situation where a proven playbook doesn’t exist,” said Baxter Orr. “They will be balancing immediate triage decisions while focusing on longer-term recovery plans. In understanding the implications of revenue streams and collectability, balancing the workforce, and evaluating where variable operating expenses might be shifted or reduced, the office of the CFO needs to rely on more modern solutions and technologies that streamline processes and deliver insights.”
While most companies aggregate and analyze data, the level of accuracy and efficiency is largely dependent on the tool being leveraged. Manual tools like spreadsheets are often fragmented, tedious and prone to error, opening the door for data to be misrepresented and misinterpreted. When every extra dollar of cash reserve counts and solvency is on the line, finance teams can’t afford to spend valuable time aggregating, validating and consolidating data in disparate spreadsheets.
Leveraging a connected financial planning approach can arm CFOs with stronger insights for strategic decision making. With a connected solution, data from the farthest points of the business—from sales professionals and modelers to product developers and supply merchants—is collected and validated automatically within a single, unified environment. For example, CFOs will need to be in constant communication with supply chain leaders to understand production realities and disruptions. With most teams working remotely, cloud technologies will become even more critical for finance teams to ensure they have visibility into real-time data from different teams across the organization. This single source of truth ensures all functions across the enterprise are represented and enables finance teams to better align objectives with operational tactics and financial plans. Having the capability to aggregate data collaboratively and in real-time across the organization, CFOs are armed with a more accurate and holistic view of the businesses’ activities and outcomes.
“Being able to quickly ‘model out’ changing scenarios across the business—at a very rapid pace and have them connect to each other—is something CFOs haven’t always had at their fingertips. These technology advancements have put more precise information and insights into the hands of the CFO.” said Baxter Orr.
With the ability to model outcomes against any number of variables changing in real time, CFOs will be better equipped to utilize available levers to lessen short-term exposure and drive long-term liquidity. With fast access to actionable insights and the agility to pivot quickly, CFOs can feel confident acting decisively in unchartered waters.