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27 March 2020 6 min read

Covid-19: Four actions CFOs need to focus on right now

Nick Stewart

Nick Stewart
Partner | Financial services | London

The outbreak of the novel coronavirus is stretching Finance departments to their limits. While the impact of the epidemic sweeps across the globe, CFOs must stay laser-focused on what’s critical now: maintaining mandatory reporting obligations to stakeholders and the market; managing cost, liquidity and viability of the business; and providing enhanced business partnering and reporting. 

Here are the four areas CFOs need to be focussing on right now:  

Manpower for BAU reporting:

Mandatory reporting to the market and regulators remains a legal requirement. Many CFOs are experiencing a shortage of skilled workers due to short-term sickness, challenges with remote working and an inability to stand up offshore or nearshore reporting teams. CFOs should now plan to backfill positions with skilled interim Finance FTEs to keep BAU-reporting going. Failure to do so has regulatory, legal and liquidity consequences. 

Liquidity management and management of suppliers:

Many regulated firms perform daily and intra-day liquidity and hold cash buffers, but this is challenging in sectors with less mature treasury functions, where accurate cash flow data to manage day-to-day cash flow is difficult to obtain. Cautious liquidity-management is particularly critical in organisations where a large percentage of cost originates from outside the company, e.g. supply chains and third parties. 

In the current environment, effective management of cash inflow (receivables, WIP) and cash outflow (procurement, 3rd party suppliers) is time- and cash-critical. CFOs have to be focussed on cash preservation – and then profit – for survival.  

Short- and medium-term cost reduction:

In line with volatile revenues and forecasts, many CFOs have started managing costs down dramatically. Albeit being a tactical measure right now, this can be expensive in the medium and longer term, and risk damage to client relationships, brand and talent. Rather than cutting right across the cost base, CFOs should run a diagnostic across all services and tasks and identify what can be reduced or stopped, and what the cost saving opportunities are. This may well involve time and effort to set up, but will be ROI accretive in a short timeframe. 

Planning and modelling for business continuity:

CFOs are under significant pressure to model the effects of Covid-19 on their companies and plan the actions needed to navigate the situation. All spotlights shine on data quality and data accuracy right now. Accessing large and varied data sources and navigating complex systems can lead to inefficiency at best, and data security issues and breaches at worst. Efficiently remediating data gaps and providing tactical solutions and tools to provide better and higher quality reporting and visualisation of data is critical right now.

At Baringa, we have experts to discuss any of the above with you and help CFOs respond to the challenges of the Covid-19 crisis. All our consultants are set up to work remotely, and our collaboration tools allow us to partner with our clients and help them through this crisis. Please reach out to Nick Stewart to arrange a call.