Agility and transparency
In this context, two things are critical: agility and transparency.
For finance teams, being agile means having the ability to plan and re-plan continuously as events change. For example, if you’re a computer hardware company and the price of imported components goes up, finance needs to be able to quickly assess the impact to the business, execute decisions made by the business, analyze the results, and then repeat.
In the current environment, planning has taken on new urgency. Being able to quickly model different scenarios gives management teams the ability to have informed discussions about trade-offs, and make the best decision.
Transparency can be easy in good times, but it’s during uncertain periods that companies are truly tested. Unexpected change or a business headwind is unsettling for employees and external stakeholders like customers, partners, and investors. However, it’s during these challenging times when transparency matters most and can go a long way in building and solidifying trust.
Take, for example, the potential impact that slower economic times or stock market volatility can have on employee compensation and morale. Being as transparent as possible about what’s happening and how the company will address any changes will demonstrate honesty and help build trust, while reassuring employees that their leadership is focused on what’s ultimately best for the business in the long run.
These are great concepts to bake into the fabric of any company and can be useful for finance leaders when planning ahead. But what are some of the specific actions finance leaders can take to ensure agility and transparency in action?
Conduct dynamic business planning
First of all, planning, liquidity and risk management are essential to instilling financial agility. Uncertainty heightens the need for more dynamic business planning based on a range of scenarios rather than traditional quarterly or annual planning cycles.
Having the ability to conduct more dynamic business planning means organizations can respond to changes and course correct to better understand the impact on top-line revenue and bottom-line expenses. For example, are customers paying on time? What are the implications of a percentage of those customers not settling invoices? Which supplier contracts need to be renegotiated based on changes in demand?
Create a comprehensive communication plan
Similarly, during tough times finance functions are also well placed to help business leaders forecast cash and liquidity and identify risks with greater speed and accuracy. Many organizations have multiple sources of cash, and creating a complete picture of their overall cash position and liquidity can be challenging without the right tools.
When it comes to transparency, a comprehensive communication plan is vital to keep all stakeholders informed and aligned with key insights on business performance and strategy.
Remove departmental silos through unified data
The need to make insights more accessible across an organization is heightened during times of uncertainty, and it doesn’t help when data is trapped in departmental silos, or locked away in different tools and requiring time-consuming integrations. Workday research shows that over half of the surveyed respondents believe access to data within their organization is somewhat accessible but remains outdated and siloed within functional teams.
Businesses should have access to financial, workforce, and operational data together, as a single source, to answer fundamental stakeholder questions. For finance, this means having the ability to share credible insights with the wider business and, more importantly, encouraging these stakeholders to take action based on this data.
For example, finance needs to provide the business with better insights into working capital to better understand minimum cash and liquidity requirements, including with critical back-office activities, such as paying bills and turning receivables into cash.
The new status quo for finance
The COVID-19 outbreak changed the rules completely in terms of how and where businesses operate. With employees now working from home, many finance functions had to consider new ways to keep delivering critical services, such as closing the books.
The need for finance to embrace more efficient, dynamic ways of working pre-dates the global pandemic, yet it’s now proving to be a significant catalyst for transformation. For finance, that means embracing automation and emerging technologies, such as machine learning, that can be applied to key processes. CFOs have long since been looking to reduce the time spent on processes such as closes, consolidations, reporting, and payroll—what’s happened in 2020 has now made this an imperative.
Finance is well-placed to cast aside legacy technology challenges and develop the skills of its existing workforce to benefit from emerging technologies. Now may be the optimal time to drive this transformation.
Focusing on the right areas will be absolutely key for finance leaders as the world starts to turn again. Making agility a priority, while arming the organization with the right insights to make better decisions, and understanding how finance will deliver what the business needs—potentially from any location—will also be paramount. All of these factors exist alongside a heightened need for brand trust and transparency—something which the finance function will play a key role in delivering.
- Corporate Performance Management: Beyond Planning, Budgeting, and Forecasting
- Best Practices for Scenario Planning and Remote Financial Close
- The Future of Business Partnering Global Survey
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