The CFOs’ role has usually been tactical — for example, implementing solutions to deal with the immediate challenges of COVID-19. But this same pandemic has highlighted the need for finance leaders to have a say in the company’s long-term strategy as economies enter the new normal. 

Stabilization in anticipation of a post-COVID scenario and long-term preparations are critical steps that CFOs now have to take alongside other measures. Consulting firm McKinsey published a list of possible areas CFOs can zero in on strategically as they navigate the altered business environment.

1. Optimizing cash reserves is the top priority of a CFO. Therefore a finance leader should focus on assessing the company’s liquidity, setting up a cash war room, developing possible scenarios, and rolling out an internal and external communications plan.

Set up the cash war room. There is a possibility of a cash shortage in facing a paradigm shift. Launching a cash war room can help CFOs consider taking bold moves on spending throughout the company. There are also tools that finance leaders can use to prioritize payments and have a clear report on metrics which can track liquidity in actual time.

Develop scenarios. Different points of view about different integrated scenarios, for instance, knowing which countries or industries are recovering faster than the other. CFOs should be able to identify trigger points that can suggest the next actions in finance teams will take. Finance leaders should come up with a structured plan that the executive team can use as a guide in making business decisions to rationalize projects, while monitoring conditions that can cause different scenarios to unfold. 

Institute a communications plan. Communicating the priority of optimizing cash – preserving while deploying dynamically, will help the entire business organization why it matters. In doing so, departments and business units will have an understanding on how they can contribute and what their specific role is to help with the recovery. 

It is also important to communicate with investors and boards of directors proactively. CFOs should point out how the crisis affected the company, the actual versus projected effects, actions that were taken or being taken to protect the organization. 

2. Stabilizing the business. After addressing concerns about preserving cash, the next step for the CFO is to ensure the position of the company so that it can operate efficiently in the post-COVID-19 world. The important tasks of the CFO include making improvements in operations to boost productivity, reevaluating investments, and strengthening the balance sheet.

Impairments, debt refinancing, inventory reduction – finance leaders can use these diagnostics to clean up the balance-sheet and be able to extend the company’s flexibility. CFOs also need to focus on shifting human and financial resources to projects that yield more and actions that are more valuable for the future.

3. Reimagining, reforming: Thriving in the new normal. The main objective to strengthen the company is to move forward. Once the pandemic crisis subsides, having strategic plans and actions is necessary. CFOs and the entire senior management should have a group of executives whose aim is to focus on strategic planning. 

Dynamic resource reallocation, programmatic mergers & acquisitions (M&A), strong capital expenditure, productivity breakthroughs and differentiation improvement – according to McKinsey, these are the actions that can have a huge impact on the ability of the company to greatly outperform the market.

Finally, CFOs must adopt a transformation mindset when reallocating resources.

CFOs and finance organizations should take advantage of this period of crisis to restructure what is needed that requires transformation. Adopting a transformation mindset when setting aims, managing performance, challenging the company on its growth or expenses will significantly help boost revenues or reduce costs.