The continuously changing business and regulatory landscape during the COVID-19 pandemic means businesses are now more reliant than ever on being able to plan accurately. However, inefficient financial systems and dependence on manually circulated spreadsheets means that organisations are often incapable of understanding their present performance, never mind looking at three months into the future.
An influential Harvard Business Review article looking at what companies can do to survive a recession – and even thrive afterwards – found that getting out of a tough situation didn’t require a reduction in staff, but improving operational efficiency, reducing the time to go to market, and looking at value increasing asset acquisitions. While the article focused on the fallout from the global financial crisis, the results can be applied across any crisis.
The role of corporate finance teams is critical when it comes to surviving a crisis. As the numbers people, they need to find ways of improving efficiency, which often comes down to reducing costs, and look at where investments are needed in order to help the organisation grow. Organisations will need to consider the financial impact of introducing new products and services, expanding to other geographical markets, exploring additional customer segments, or even acquiring other businesses.
Cumbersome manual processes
The pandemic has changed the risk environment, and company boards are heavily reliant on their finance teams to give them the answers they need. However, for businesses with multiple operating entities, and using multiple finance systems, this is a cumbersome process, requiring multiple spreadsheets being circulated among the different members of finance teams in order to be completed.
If it takes weeks just to create a snapshot of performance at that time, businesses have little chance of being able to quickly and accurately plan ahead. Worse still, in order to reduce confusion or error, this task falls on a single individual, often the CFO or finance director, who has to put him/herself into a state of lockdown in order to develop a new plan each time there is a new requirement or change in environment.
Quite clearly, a new approach is needed – one that accepts that finance teams need to be able to seamlessly collaborate, as well as plan continuously. But, this is impossible without access to the right tools. Financial planning and analytics (FP&A) software, such as Planful, allow large numbers of people to collaborate and add the data required to build these models, while the actual process of planning is automated in order to cut down on the time required.
Working with an experienced partner
In order to get started, organisations need to work with a partner who is able to bring in a team of data consultants with extensive expertise in finance deployments. They can help in ensuring that data from disparate systems are gathered together, and even put in place the processes that are needed in order to switch toward continuous financial planning.
Given the nature of technology, this can mean that the right partner can help companies make the switch – including getting results from all their operating entities into one integrated set of results – without even having to be present on-site.
Powered by the cloud platform, Planful’s FP&A tools enable finance teams within the organisation to modify their plans and assumptions in response to external changes – such as the current fluid regulatory environment that is required to combat the spread of the pandemic – and the involvement of a variety of employees that are required in order to accomplish this.
The COVID-19 pandemic has drastically altered the risk landscape, with an increased demand from stakeholders for future planning. If a business is in the alcohol or tobacco industry, and bans are reintroduced, what is the impact? What if a production facility needs to be temporarily shut down for sanitising?
And, if infections spike, and the country returns to a higher level of lockdown, what then? The days of doing risk scenarios once a quarter are long gone, but organisations need the right tools if they are to make the change.