In the coming weeks, CFOs will be called on to play a key role in ensuring their organization’s recovery and continued operations.
Before the COVID-19 crisis, the overall objective of finance teams was to transition to a position as strategic partner where transaction processing would be automated to reduce the time spent on lower-value activities.
In due course, they would be dividing their time collaborating on the entity’s strategic initiatives (e.g., assessing growth prospects), supporting decision-making through business intelligence and strengthening oversight and governance mechanisms.
How to manage liquid assets effectively
The financial flow pattern has changed dramatically in all organizations as a result of the COVID-19 crisis. This paradigm shift requires CFOs to play a major role in the business’s continuity, including managing liquidities. In the medium term, they must ensure that the organizational structure and technology deployed make it possible to maintain and optimize cash resources.
However, there are a number of issues that limit how efficiently finance teams are able to manage cash resources. Some of these include:
- the difficulty in easily obtaining an overview of all bank balances;
- the partial accessibility of funds;
- issues related to the preparation of cash flow forecasts over different periods;
- the challenges of preparing multiple versions of cash flows;
- inefficiencies in producing management reports.
The current pandemic environment is expected to result in further centralization and integration of treasury and finance activities in order to better manage and optimize liquidity.
The treasury system as an interface
Thanks to changes in the technological environment, previously decentralized processes will be combined and then optimized through integrated solutions such as the consolidation of bank accounts, payments and collections and working capital management.
Ultimately, the treasury system will serve as an interface between banking platforms, market data, accounting and all other systems, providing a comprehensive view of treasury activities, including cash resources.
CFOs will be major contributors in the implementation of all of these technologies, as well as in the organization’s overall innovation process.
This will require the ability to analyze and plan quickly, to act while keeping an eye on changes in the ecosystem, and to keep a watchful eye on the market and the measures in place. This function will require considerable agility and resiliency. Learning, unlearning and relearning, will be vital in a world that has been transformed and will continue to change.
Above all, because of and, perhaps, despite this exceptional situation, CFOs will be able to strengthen their position as a strategic player within their organization.
They will ensure the resumption and optimization of operations through the use of available and affordable technologies. They will contribute to adjusting the business model, optimizing cash management and searching for financing and strategic partnerships. They will provide advice on investments in the organization’s main sectors and ensure that they have a significant role in governance, particularly in terms of risk management and cybersecurity.
With its key role in the recovery, the finance function’s transformation will be accelerated, potentially providing it with an unprecedented position within the organization.
11 May 2020 | Written by :