Financial planning has become more challenging amid the pandemic which altered the way people work and conduct their business. Most companies actually revised their 2020 capital expenditure budget by the middle of the year after governments across the world imposed border restrictions that limited the flow of people, products, and services.
Revenue targets were also revised, as many companies either downsized operations or laid off workers on sluggish demand. Most retail companies actually migrated to online shops, as brick-and-mortar stores were ordered closed at the height of community lockdowns. In short, establishments were forced to modify their plans, strategies and priorities to adapt to the changing economic conditions.
Amid the sudden shift to virtualization, companies may be overwhelmed with planning, forecasting and budgeting tasks in the middle of the year. This is where agile cloud solutions can help the executive team, particularly the chief financial officer (CFO), deliver the budgeting tasks assigned to them, using storage solutions with predictive analysis.
With agile cloud solutions, the CFO can quickly re-evaluate the data at hand, look at emerging trends and make accurate forecasts that will result in better budgeting process. This will guide day-to-day operations and enable the management to better explain to shareholders the trends in earning per share (EPS).
Better planning and budgeting will result in improved outcomes for all including customers, employees, investors and communities. More than making bold assumptions, this involves measuring the actual performance, the emerging trend and the most likely outcomes three months, six months or one year ahead.
The pandemic is also the time for the CFO to recalibrate investments and expenditures to ensure the survival, recovery and then strategic growth of the company. Amid the many uncertainties in the current environment, the CFO will need to do various simulations using company data to arrive at the most efficient approach to success at the least cost.
As priorities change during this challenging period, the CFO needs to look at where the company resources should go in running the business such as new technologies, sales and distribution channels, business units, or product lines?
The CFO should also look at the whole industry, the market and competitors. The pandemic has had broad implications on the global economy, with some countries reporting double-digit contraction in the second quarter of 2020. So it is no longer advisable for the CFO to limit the analysis on company performance, as he needs to look at the impact of the pandemic on the whole industry. By having general insights on what is happening in the industry, he can recommend realignment of resources to reduce the impact, if not insulate the company, from the health crisis.
Analysts believe that the realignment of resources with strategic priorities will allow companies to weigh the tradeoffs that should be made.
It is also equally important to be flexible in budget planning these days to allow quick adjustments that should be made as new developments take place. This will help the company to allocate budget for emergency situation such as allowance for employees working from home and provide assistance to the community where the company operates as a part of its corporate social responsibility and sustainability programs.
CFOs need to be more knowledgeable, agile and flexible in situations like a health crisis to minimize the impact of uncertainties, anticipate company performance in the months ahead and make strategic moves to achieve the best possible results.
CFOs need a powerful cloud solution that provides real-time information and 360-degree view of the business with predictive analysis to address such challenges. The NetSuite ERP solution is one such tool that helps CFOs make smarter decisions that lead to company survival, profitability and strategic growth.