How can FP&A provide stability in a time of global uncertainty?

28th Apr, 2020

COVID-19, has unleashed a global shockwave in world markets, industries and economies, resulting in unprecedented levels of business uncertainty. FP&A teams are trying to navigate uncertain cash flow, and strengthen financial stability in extremely volatile markets; to enable them to overcome challenges in the near future.

As contingency plans are being re-developed and deployed, FP&A teams are working overtime to mitigate the financial damage caused by the worldwide ramifications of COVID-19. They are seeking the most efficient processes to identify the risks involved in their present and planned operations, whilst measuring them against forecasts and models to understand the long term impacts and a potential recovery timeline.

PwC’s COVID-19 Global CFO Pulse Survey, reported several top concerns of 824 CFOs across 21 countries or territories. As of April 14th 2020, 71% of respondents listed their top concern of COVID-19 was the potential of a global recession. Furthermore, the survey revealed three main key points:

  • Nearly three-quarters (73%) of respondents are greatly concerned about the effects of COVID-19 on their operations; only 9% view it as an isolated challenge not currently having a major impact on their business.
  • 45% of CFOs plan to take advantage of government support programmes. The most common types of support they are considering are tax payment deferral and extension of tax deadlines.
  • More than half (56%) of respondents believe their company could return to ‘business as usual’ within three months if the crisis were to end today — a view more prevalent in countries where leaders report lower levels of concern.

These key findings show that FP&A teams cannot avoid putting resources towards the management and navigation of COVID-19, and that businesses are accepting a new reality for the foreseeable future. When prompted for expectations for the next month, 22% of the finance leaders expect to face insufficient staffing, resulting in an inability to get critical work done. These growing capacity constraints will require businesses to adopt more efficient methods of operations, planning and management.

As the reality of COVID-19 sinks in, and its impact continues to grow, adaptation and decisive action is critical for FP&A teams to survive this market turmoil. FP&A teams now more than ever must utilise agility and strategic pivoting in operations in order to remain functioning. To achieve this, businesses need the financial tools and solutions that can rapidly collect and model large quantities of data.

Stabilising cash flows

CFO’s and FP&A teams will also need to work on stabilising cash flows, systemising their business decisions and building long-term recovery plans. In redeveloping their priorities both short-term and long-term, FP&A teams will be able to evaluate their business operations and their companies’ fiscal outlook. In order to achieve this, FP&A teams need to seek out modern solutions and technologies that can offer them stability through streamlining processes and delivering relevant insights.

Real-time data

Furthermore, although most companies aggregate and analyse their data, the levels of accuracy and efficiency varies depending on the tools they are utilising. The usage of manual tools such as spreadsheets, which are often error-ridden, and prone to fragmentation; leading to further human error in interpretation and analysis. At a time where every dollar in the budget needs to be stretched, businesses are risking liquidation if they waste their valuable resources in manually aggregating, validating and consolidating data across different spreadsheets.

Planning and performance management

Utilising MODLR equips FP&A teams with a collaborative planning approach, enabling faster insights to be made for their strategic planning and decision making. As changes occur in the market, FP&A teams need to be in constant and steady communication with various different stakeholders within the organisation to react to new challenges and opportunities. Now, the majority of FP&A teams have moved to remote working, it is especially vital that companies adopt a cloud-based system, to ensure that communication is instantaneous. Having a real-time single source of truth ensures that all operations of the business are represented, and lets FP&A adjust business objectives with financial plans. The ability to collaboratively aggregate data across an organisation provides FP&A teams and CFO’s more accuracy, clarity and breathing room to evaluate business activities and outcomes.

MODLR allows FP&A teams to model and forecast the outcomes of a limitless number of scenarios and changing variables - all in real-time. FP&A teams will be well-resourced to work towards lasting liquidity; gaining a greater sense of confidence and business stability in an increasingly uncertain world.

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