Impact of the pandemic on business and how finance function has reinvented itself

Prior to the Covid-19 epidemic, many finance functions across various organisations and sectors were already transforming or evaluating their operating models. It was mainly in response to a broad and effective set of challenges and drivers, including managing costs, conveying value, attracting and retaining talent, making efficient use of technology and automation, and conforming to new regulations.

In many cases, the effect of pandemic in business has expedited the need to modify the finance function. Businesses have been imposed to run operations remotely with a large number of people working from home. They have had to move promptly to deal with sudden, pressing provocations, such as those around client payment delays, which have become troublesome as cash flows dry up and the global supply chain comes under pressure.

The focus of the finance function has shifted from classical transaction recording and reporting towards reforming, planning and forecasting, modelling schemes, future cash flow management, reinvention of business after pandemic, and alternative funding options. As a result, the finance function can no longer manage to spend most of its time on routine activities because it requires more time, insights, and support in making decisions.

Personnel challenges

Covid-19 is highly contagious, and precautions to reduce its spread, such as wearing masks and social distancing, are critical. In addition, many organizations, often due to legal requirements, face the challenge of maintaining employee productivity while working from home. In this regard, the pandemic has conducted new personal challenges to the forefront for finance and many businesses have been looking for finance function after pandemic.

Finance function priorities

The Covid-19 pandemic has extended business with unprecedented challenges, putting organizations under pressure in ways that weren’t forecasted and posing new demands on the finance function. Ensuring the company’s financial health and the new business model are the key priorities and meeting the needs of uncertain stakeholders, such as its employees, suppliers, customers, and shareholders. As a result, companies are concentrated on securing entrepreneurial liquidity and maintaining essential business processes to keep operations running as smoothly as possible.

More than ever, the finance function after pandemic needs to certify that they have a reliable financial records database kept accurate and up to date. Some essential activities include:

  • Recording business transactions in real-time or close to real-time to have complete visibility and transparency around working capital items;
  • Applying realistic judgments around the open items that directly affect cash inflows;
  • Providing more detailed, faster, and more persistent reporting and awareness on the most critical items;
  • Considering real-time reporting chances for working capital positions and rolling forward cash forecasts;
  • Shifting target from historical reporting to future financial predicting and modelling;
  • Concerning bridging measures, such as loans, grants, government incentive funds, insurance claims, etc.; and
  • Considering other government-supported estimates such as tax credits, payment deferrals, reporting extensions, etc.

Creating end-to-end processes

Once companies have come through the worst of the effect of pandemic on business, having ensured liquidity, the focus may now turn to analysing the structural and procedural consequences of Covid-19. Naturally, no company could have fully predicted a pandemic of this scale. However, finance and accounting functions should look at this crisis as an opportunity to grow future flexibility and agility. Once the business functions were shifted from a single work location to homes, the need for clearly defined and documented end-to-end processes emerged.

Digital solutions

Today’s finance and accounting functions can be digitalized entirely. Therefore, after we emerge from the Covid-19, one of the first functions for the finance professionals will be scrutinizing any manual action that still requires physical human interaction or manual processing and considering digital solutions. The entire ecosystem of automation estimates must include large-scale enterprise resource planning (ERP) system’s functional capabilities and niche tools to automate precise processes.

On the other hand, fully digitalized finance and accounting functions bring cyber security challenges: network security and stability, access rights, data exchange channels security, country regulations and limitations around data storage and exchange, etc. Moreover, the more a complex ecosystem grows, the more issues arise regarding data integrity, system compatibility, duplication, and reconciliation of data and actions in multiple systems.

The flexibility of finance and accounting functions to scale a particular operation up or down depending on changes in the environment is significant. The need to bring people is when the workload increases and to downsize a team when required. The ability and required skills are set to shift focus from routine transaction processing and reporting toward accurate analytics, scenario modelling, and decision support. Outsourcing, co-sourcing, and unexpected workforce solutions can make such decisions significantly more accessible because there are generally no issues around on boarding or making redundancies.

Skills needed post Covid-19

A good number of professionals in finance are anxious about maintaining or enhancing their skills during this challenging business environment. Yet feasibly more interesting is the wide range of knowledge domains in which employees have worked to improve- plan to improve – their skills and tackle the effect of pandemic in business.

The Covid-19 pandemic has created an unusual shock to global business, but it has also dispensed finance and accounting functions with the chance to learn lessons and assembled for the future. Finance leaders must gain the insight to know what changes to implement and make sure they find whatever positives they can. It is equally valid of any future external or internal change that the function undergoes. It has always been vital to flex the structure of the finance and accounting function against the ever-changing legislative, digital and talent landscape. However, any changes to the finance and accounting function should be made with a long-term view so that what is executed now does not have to be reinvented further down the line.

The current economic environment is implementing challenges to finance functions on several levels to create a new business model. First, it’s necessitating a shift in priorities, with increased emphasis on risk management and cash forecasting and management. Secondly, it also requires great attention to enabling staff to work from home and eventually return to the office safely. Finally, many finance professionals have concerns about the developing skill set needed in a post-pandemic world. As a result, most are working on upgrading their skills in a wide range of topics. In this rapidly changing world, one thing remains persistent: Finance professionals must constantly work to enhance their skills to maintain and advance their careers.

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