What can Finance & Accounts function learn from COVID-19

Balance Sheet is important than P&L

1. You need to focus on health of your balance sheet and not only on P&L, P&L projections can vanish in absence of demand.
2. Over leveraging kills a business in a recession, these companies are first to declare bankruptcy
3. F&A should constantly review the debt equity mix and quality of debt
4. Liquidity is important, one should have liquid cash to take care of atleast 3 months of committed cost
5. It is important that all balance sheet items reflect actual nature of the transaction, having a large amount of non-recoverable debtors will give a false comfort on the current ratio
6. A planned quarterly review of each balance sheet item can help the management in understanding the vulnerabilities of the business

Automation is inevitable

1. CFOs that invested in cloud and connectivity have been able to continue to deliver services to business without any disruption
2. F&A needs to embrace automation and make the processes free of any physical interface.

Cost control is in focus again

1. CFOs needs to have tight control over expenses and ensure that all expenses are pre-approved by concerned stakeholders
2. Having PO- GR - IR - payment control is a bare necessity to ensure everyone understands and follow the process at a cost of reduced flexibility.

Budget is not the benchmark of cost saving

1. It is important that CFOs question each and every expense on its merit rather than focus only on cases where it is exceeding budget
2. Financial and non-financial outcome for each Purchase needs to be defined and sign-off from the business needs to be taken before processing the invoice.

Strategic Planning

1. F&A needs to have a target of contribution 1-2 % of sales as savings
2. F&A needs to analyse the data it collects and check areas of leakage and improvements
3. F&A needs to become the driver of strategic plan and highlight any deviation from it
4. F&A needs to question the achievements boasted by other functions and validate them
5. F&A needs to come out of a compliance mindset and become a driver of change and discipline.

Employee focus

1. F&A needs to groom their employees to move out of a traditional mindset and drive improvements not only in the function but also the business
2. There needs to healthy exchange of resources between departments to ensure that finance related discipline and acumen is passed on to other functions
3. Employees needs to be business oriented and make processes agile to meet business requirement
4. There should be a clear growth plan defined for employees in terms of both business and functional milestones.

#Finance #CFO #COVID