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What COVID-19 means for CFOs

It’s been an overused word in recent weeks, but the position the UK and the majority of the world currently finds itself in is truly unprecedented. Simon Gray looks at key coronavirus implications for the CFO.

26th Mar 2020
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Portrait of a CFO looking pensive in an office interior.
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Any finance director or CFO of an organisation large or small will no doubt be experiencing a number of new and unfamiliar challenges that would have been unlikely to have been factored into any disaster recovery plan. These will be both personal and professional and the two in my experience usually overlap.

I received a call from the CFO of a small business last week who wanted my advice on the best digital platform to communicate with his workforce on, now that they’re working remotely. It was a real-world example of a small but difficult challenge that has presented itself as a direct result of a pandemic that none of us ever anticipated. 

Cash is always king 

The immediate priority for the Finance Director or CFO will be to address the potential financial impact on the organisation. If business dries up or orders cannot be fulfilled, what is the anticipated impact on the cash position? Cash is always king and if liquidity is under pressure, how can this be remedied quickly?

Can the debtor book be called in, creditor payments delayed, or short-term borrowing secured? The best option will depend on the type of business and the impact of the contagion on the cash position of customers and suppliers. 

I was talking with the managing director of a business this week with a large proportion of its working capital in the form of debtors. Under normal trading conditions, this would be nothing to worry about, but these are not normal times.

Protect your people 

The news has been dominated by concerns over the security of jobs and workers’ ability to pay their bills. Statutory sick pay didn’t quite cut it and the Government has now stepped in with additional measures that will help individuals feed their families and organisations retain staff.

How this will work in practice is still evolving and the finance director or CFO will need to get a grip on this quickly and ensure clear communication across the organisation to ensure everyone understands. Political solutions on the surface may seem simple, but behind the headlines, the devil is always in the detail.

Fear is one of the worst contagions of them all and in this time of uncertainty, the finance director or CFO will need to do his or her best to provide stability.

At the outset of the financial crisis in 2008, I had just started my own recruitment company. What was evident during this time was the knee-jerk response of organisations in cutting staff. When the market eventually came back, they were left chasing people they’d previously let go. The businesses that got back on their feet the quickest were the ones that had worked hard to keep their people.

Protect yourself 

While your Board and the team around you may look at you like Superman or Superwoman, you’re only human. What’s happening at the corporate level will also be impacting you personally. If you’re not used to working alone from home with the kids running amok, this will present a new and unique set of challenges. 

Mental health is just as important as physical health. While in isolation you’re in the best position to protect the latter, unless addressed this could be to the detriment of your mental wellbeing.

Being self-employed I’m well aware of these challenges. The Prime Minister has stated that one solo outing each day for exercise is currently permitted. Take this opportunity, he’s done this for good reason.

During the lockdown, I’ve been for a run every morning, and the positive impact it’s had on my outlook for the rest of the day has been immeasurable. 

Similarly, supporting family members who may be struggling for a multitude of different reasons means lending an ear and providing support. Reach for the oxygen mask first. Remember, you sometimes have to help yourself to be in a position to help others. 

Resilience 

In times of crisis, leaders come to the forefront. As finance director or CFO this in part will fall to you. You will make mistakes – we all will. But it doesn’t really matter.

Be decisive, carry yourself with confidence, and those around you will gain from this too.

We’re a resilient nation and we’ll get through this. Out of every bad situation comes new opportunity, in the meantime batten down the hatches and stay safe until the storm has passed.

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By Sanjeev Nanda
26th Mar 2020 08:55

Times like these are when real leadership comes into calling - one that is built on character, and not some surface level, corporate hogwash definition. The govt. has put some safety nets in place, and although they're not the moon, they're at least something. Leaders should realize that although they're in a tight spot, their employees who live paycheck to paycheck, might be struggling for life and death. The coronavirus (covid-19) outbreak is a litmus test, those who will come out shining, will be rewarded with undying loyalty and diligence. Those who fail, will perish by this time next season.

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