The rapid spread of COVID-19 has disrupted businesses around the world, rapidly changing market conditions and rendering most corporate 2020 plans futile and companies need to plan in times of uncertainty.
Definitely, the coronavirus is a stark reminder of the volatility of our global business environment.
In other words, for many C-suite executives, it’s hard enough to accurately budget, plan, and forecast.
Last but not least, we’ll look at what CFOs around the globe can do to quickly respond to changing conditions and ensure business continuity, while improving planning processes and minimizing organizational risk .
Feeling unsure, overwhelmed, or frustrated? Book a demo with one of our consultants on financial planning in uncertain times.
1. Create a Business Continuity Plan
First and foremost, executive leadership and finance teams should focus on developing a plan for business continuity.
In particular, a business continuity plan is an outline of the policies and procedures that will keep your company running during major disruptions.
This can include but is not limited to a reassessment of capital investments, evaluating existing cash flow, and devising a plan to acquire debt.
Moreover, for most organizations, the Office of Finance will play a critical role in the creation of the business continuity plan.
Indeed, to assemble an accurate continuity plan, finance professionals should consider the following to plan in times of uncertainty:
2. Prepare for a Successful Tomorrow with Scenario Planning
As a result of COVID-19’s impact on the markets, finance teams must consider countless “what-if” scenarios to prepare fo a successful tomorrow with scenario planning, such as:
- How long will the outbreak last and how will it affect the markets?
- What unpredicted costs will we incur (i.e. production, real estate, equipment, headcount)?
- What liabilities might we incur?
- How will this impact our workforce?
- How will this impact our revenue and profitability?
Luckily, there are processes and software that can minimize the time, effort, and errors associated with spreadsheet-based planning processes that would traditionally be used to model these “what-if” scenarios.
Clearly, Corporate Performance Management (CPM) software can easily model “what-if” scenarios to provide insight into your businesses’ potential future state, helping you reorganize and plan for a successful tomorrow.
3. Leverage the Collaborative Nature of Cross-Company Financial Planning
Never has there been a more opportune time for businesses to leverage agile cross-company financial planning to rapidly plan for the future with a detailed and collaborative approach.
In addition, at the foundation of agile cross-company planning are three pillars:
- People – Foster an environment of collaboration by identifying, including, and empowering key roles within your company.
- Process – It’s a best practice to map the planning cycle and have regular touch points to follow-up on. It
- Technology – Your technology should integrate with all your business systems and enable you to have a single view of your data.
In fact, the primary benefit of cross-company financial planning is that it centralizes your data from disparate systems and helps companies to plan in uncertainty times.
As such, it is best suited to businesses that have different employees, departments, and systems that handle financial data.
Without a doubt, with a financial planning solution like Prophix, your data is immediately accessible to all users, allowing them to evaluate the financial performance of your organization.
4. Reduce Risk with Rolling Forecasts
With the right tools and processes in place, many companies can create rolling short-, medium-, and long-term forecasts for their company.
Above all, reducing risk with rolling forecasts allow you to “view opportunities and challenges beyond the fiscal year and to fight the myopia that comes with an overemphasis on current-year targets” (CFODive).
Therefore, Corporate Performance Management software can assist finance departments in compiling and analyzing the data necessary for a long-term forecast, as well as “what-if” scenarios and cross-company budget and planning, which are critical parts of a business continuity plan.
5. Unlock Your Budget
It’s only April but it’s likely your 2020 budgets and forecasts are no longer relevant. Now is the time to “unlock your budget” and reconsider what line items are critical to your businesses’ success (CFO) and how to plan in times of uncertainty.
In other words, CFO recommends that CFOs “address the risks and opportunities posed by a range of virus scenarios, building high-level models of business cases to quantify the impact to P&L, cash flow, and Balance Sheet”.
Further suggestions include assessing the implications on productivity, investigating potential hidden costs, and addressing driver-based scenarios to plan in uncertainty times.
Finally, this can be done in conjunction with your rolling forecasts to give you a better understanding of all possible scenarios, which can further inform your business continuity plan.
Above all, your business is evolving. Your systems should evolve too.
Furthermore, achieve your goals more successfully with Prophix’s innovative Corporate Performance Management (CPM) software.
Improve profitability and minimize risk when you automate repetitive tasks and focus on what matters. Budget, plan, consolidate and report automatically.