April 2020.

It’s been about a month now since many of us have been working from home. As the Covid-19 pandemic spreads and we all do our bit to ‘flatten the curve’ we are getting used to a different way or living, working, and running businesses.  It’s never smooth sailing for CFO’s, but these different times have given CFO’s more headaches, concerns and challenges, both with the added stresses of working from home, and from the fallout of this global pandemic and the impact on their businesses.

What are CFO’s concerns during ‘Covid-19’?

Recent PwC Covid-19 CFO Pulse surveys (Global & US/Mex) show the level of concern among businesses and CFO’s around the world. In their list of concerns there are some which aren’t all that surprising, such as the potential for a global recession, impact on financial performance and liquidity, impacts on workforce and productivity, and supply chain issue.  However also on the list, and increasing in importance in the 2 weeks between surveys, is the concern around ‘Not having enough information to make good decisions’.

It is difficult if not impossible for CFO’s to impact the global economy, or to be able to significantly improve supply chain issues, so there is limited scope for CFO’s to do much about these concerns.  However the concern on having ‘enough’ information is one that CFO’s can do something about.

So where should CFO’s focus?

This blog from KPMG titled “Covid 19 and the CFO” touches on their thoughts on the top 5 things that CFO’s should be focusing on. There is no mention of global recessions, or financial performance, or supply chain issues. Even though these some of the main issues (besides children) that are most likely keeping CFO’s up at night, these are not things that CFO’s can easily control.

First on KPMG’s list, and rightly so in our view, is managing talent risk. In times such as these with the number of infections and mortality rates we are seeing in some areas, this is obviously a major consideration, as without talent there is essentially no business.

Forecasting and Scenario Modelling

Second on the list, and an area we are very familiar with, is Forecasting and Scenario modelling. As they say the future isn’t clear, not next week, not next month, not even next year. Even when that day comes where we can see the light at the end of the tunnel what will that light look like? Will it be the same as the ‘light’ we left at the start of the tunnel or is it a ‘new light’, one that we will have to re-learn how to live and operate in.  And in uncertain times the more information you have available the better positioned you are to deal with the uncertainty.

It is through Forecasting and Scenario modelling that CFO’s get the information they need to make the best decision they can, that is the ‘good decisions’ 1 in 5 are concerned about as per the PwC survey.  Through modelling scenarios and sensitivities such as different recovery patterns, different recovery time lines, $0 revenue worst case scenarios, extended periods of below average growth (to name a few), CFO’s obtain much more information as to how their business will be impacted and more importantly perform, in any given scenario.

Just like with our response to the Covid-19 pandemic, time is crucial. The ability for CFO’s to quickly and easily run new scenarios based on the latest information, and generate new forecasts is a crucial factor in determining the success of their decisions.

At bi5 we partner with world-leading products such as Jedox and BOARD. EPM and FP&A platforms like these not only give CFO’s the ability to generate forecasts and gather information from scenario modelling and sensitivity analysis, but they enable them to do to it quickly. Whilst products such as these should be the ultimate goal for forecasting and scenario modelling, they require some investment yet will provide benefits well into the future. For more pressing times such as now there are also intermediate solutions available that will give you the CFO access to the information you need to make the best decision you can, be these automated reporting to quickly get a grasp on your business, or simplified forecast models provided ‘as-a-service’ which can let you get up and running quickly.

Is it time you stop worrying about the things you can’t control and do something about the things you can?

Stay safe

The bi5 Team

 

 

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