Covid-19’s unprecedented impact on the global society and economy makes it a Black Swan event. CFO’s immediate response across organizations in the wake of the crises was to contain costs; understanding what expenses are critical and need to be maintained (especially critical IT expenditure to support remote work options, including bandwidth, VPN access and boosting cyber security) and where the cuts need to be maid.
Regardless of whether your business was prepared for an emergency or, CFO’s can use this opportunity as a transformation opportunity for their companies and create changes, build lessons while they adapt solutions:
Financial Resources Required – Firstly, understand how to deal with the immediate crises including any health related expenses for your people and remote WFH IT investments
Contain Costs – HR costs are typically the highest outflow for small medium enterprises. While layoffs for many companies are a last resort, however, approach to reducing costs can include a staggered approach to reducing payrolls; reviewing bonuses and considering layoffs. Many employees have taken paycuts; CEOs are sacrificing their salaries to retain employees and employees maybe willing to defer certain financial payments.
Freeze Expenditure – non-critical costs such as marketing or planned expenses on hardware, supplies for office must be frozen
Transition to Web-Based Tools – Transitioning to social media for marketing and group chats; video-conferencing and existing IT tools are cost management strategies to maintain productivity while minimizing expenditure
Renegotiate Agreements – Contracts with suppliers; tenancy agreements and interest payments to banks all need to be renegotiated to enable longer-term liquidity
Apply learning from the current crises to modify and enhance your response to a future financial emergency, which maybe radically different to what you know. Harvard Business Review emphasizes, ‘even while the crisis is unfolding, responses and impacts should be documented to be later reviewed and lessons distilled.’
