CFOs are the corona virus saviours

The COVID-19 crisis is a career-making event for chief financial officers. It’s the ultimate opportunity for senior finance leaders to rise to the occasion and prove their mettle as true leaders in their organisations. Now is your moment.

Business strategist, CFO and founder of CFO Conversations Paula Kensington calls the situation a trigger event.

“It’s up to the CFO to step up and lead the business through the way they present financial data,” says Kensington.

“This situation calls for a different type of leadership. In the past downturns were all about slashing expenses. But this situation is not just about ripping out costs. We need to be very calm and considered,” she adds.

Belinda Hogan, CFO with neobank 86,400, says CFOs have a role to play as a trusted business partner, which is really the same role they have always played.

“There’s an avalanche of financial news people can’t absorb. Senior finance professionals have a role to play distilling this noise,” she says.

Fady Said, group financial controller with Australian cloud services IT company CT4, stresses finance chiefs play a vital role in determining whether a business will survive this crisis.

“Our job is to plan, interact and react. We also have to partner with the leaders in the business and help them manage the business over the next 12 months.”

Hogan acknowledges lots of businesses are doing it tough and the right approach will depend on your industry.

“Other businesses are seeing an influx of work. CFOs are used to knowing the answers but there are no easy ones in this situation. But no-one knows the company better than the CFO. So have confidence you have the right skills to manage the business through this.”

All about people

Kensington says a calm approach is especially important when it comes to human capital.

“If we believe people are our best assets we can’t just sack them. Yes there are tensions between costs and people. But if you sack everyone now, what are you going to do in six months when you need your people? It’s short sighted to lose people just because it’s financially difficult to keep them on right now.”

She urges people to think ahead six to 12 months rather than being too focused on the here are now. “It’s about so much more than short-term cost cutting.”

Stop, start and continue

Kensington says a useful framework is for CFOs to analyse what they can stop, start and continue. This starts with a thorough audit of business processes.

In terms of what businesses can stop, she recommends exploring how the business could approach fixed costs differently. Find costs that could be procured more flexibly now to give you value and a longer-term relationship down the track. or instance, suppliers may agree to provide services at a lower cost now in exchange for an agreement you will stick with them through the crisis.

“Think long term. Unprecedented times call for unprecedented leadership. It’s time to be courageous,” says Kensington.

Hogan agrees. “CFOs are practised at responding to downturns. But don’t forget to ask for support because the CFO role is under pressure. It’s important to look after yourself and your mental health.”

It’s also essential to recognise your team will also be suffering anxiety, and this can be difficult to manage when everyone is working from home.

“As a new digital bank, we’re well set up for remote working. We have daily Zoom chats so we can check in on how everyone is doing. But it’s important not to overwhelm the team with too many meetings. It’s enough to check in once or twice a day.”

Don’t forget the numbers

From a financial perspective, it’s imperative to keep on top of how the COVID-19 pandemic is affecting the business on a daily basis.

“Assessing how your revenue will be impacted over the next 12 months is the first step. It’s the CFO’s job to ensure the business is always cash positive,” says Said.

Cash flow and the business’s ability to meet its obligations should be paramount. “Also ascertain whether your customers have the ability to pay you. Talk to them and find out how they are going,” he adds.

Now’s also the time to explore other funding sources, for instance private funding. Says Said: “Revisit your financial model as a matter of priority.”

Ultimately, this is a chance to transform you business. Because it’s unlikely the business environment will quickly return to the circumstances we were in just a few months ago. See this as an opportunity to explore new business channels, become closer to customers and position the company for even greater success on the other side of the COVIS-19 pandemic.