{"id":7885,"date":"2020-07-31T10:00:55","date_gmt":"2020-07-31T09:00:55","guid":{"rendered":"https:\/\/www.sage.com\/en-gb\/blog\/?p=7885"},"modified":"2026-01-29T10:12:32","modified_gmt":"2026-01-29T10:12:32","slug":"cfos-support-business-resilience","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-gb\/blog\/cfos-support-business-resilience\/","title":{"rendered":"10 ways CFOs can support business resilience in a changing world"},"content":{"rendered":"
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\n\t\t\t\t\t\t\tStrategy, Legal & Operations<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t
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\n\t\t\t\t\t\t10 ways CFOs can support business resilience in a changing world\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t

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\n\t\t\t\n\t\t\t\t\"Raj\t\t\t\tRaj Harash<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n

While CEOs may take the limelight (whether they want to or not) as they adjust their businesses, as the CFO, you\u2019re the guardian of the purse-strings and the key decision-maker when it comes to the company\u2019s essential asset in complex times: funding.<\/p>\n\n\n\n

So how can you contribute to corporate resilience in a changing world? Here are 10 essentials to add to your armoury, courtesy of the world\u2019s leading analysts, consultancies and technologists.<\/p>\n\n\n\n

1. Act with confidence and commit to a strategy, even when it\u2019s challenging<\/h2>\n\n\n\n

Analysts McKinsey have surveyed a huge number of businesses dealing with multiple historical downturns.<\/p>\n\n\n\n

It suggests that the most agile firms had a crisis plan long before trouble emerged. But even for those that did not, the most resilient were the ones which moved fast and decisively.<\/p>\n\n\n\n

According to McKinsey<\/a>: \u201cThey had a way of making decisions, some of which were quite counterintuitive.<\/p>\n\n\n\n

\u201cAs an example: resilient companies shed assets very early on, and their performance in terms of revenue growth dipped in the early years \u2013 before their peers\u2019.<\/p>\n\n\n\n

\u201cThis was quite a bold action, taken to shore up earnings and profitability so they could later scale up again coming out of the cycle. That would be quite a courageous action that, in a normal business practice, management teams might not necessarily embrace.\u201d<\/p>\n\n\n\n

Then, during the upturn: \u201cThey leaned forward and became more opportunity driven, so they did acquire more on the upturn and picked up assets.<\/p>\n\n\n\n

\u201cAt the same time, they did not take their foot off the accelerator on productivity and cost. They continued to go after those productivity gains year in, year out, even on the upturn.\u201d<\/p>\n\n\n\n

Smart businesses adjust fast to a frugal operating model and then maintain that model when the going becomes easier.<\/p>\n\n\n\n

2. Optimise for liquidity<\/h2>\n\n\n\n

This is again likely something that you may have already have devoted their time to. But it\u2019s interesting that the current three to six-month timeline of the coronavirus (COVID-19) pandemic means you have more opportunities to turn assets or processes into available cash.<\/p>\n\n\n\n

Retail and office estates are certainly on the agenda, and operational restructuring of finance from factoring to analyses of bank fees and making invoicing more seamless are all worth investigation.<\/p>\n\n\n\n

Analysts all agree that CFOs must head up a \u2018control tower\u2019 for cash availability.<\/p>\n\n\n\n

Management consultant Avertim writes<\/a>: \u201cThe CFO and her cash management team could set-up a Cash Control Tower, i.e. a SWAT team of cost category owners, cash management experts and business budget owners.\u201d<\/p>\n\n\n\n

Meanwhile, Accenture says: \u201cAn effective approach to managing liquidity, risk, and operations requires the finance team to create and maintain a liquidity control tower that provides an enterprise\u2019s leadership with a single view of all aspects of liquidity, linking information related to receivables, payables, inventory, risk, taxes and cash flow, through a 360-degree governance framework.\u201d<\/p>\n\n\n\n

3. Think customer first<\/h2>\n\n\n\n

If you\u2019re a CFO in the ivory tower of the back office, you\u2019re missing your calling. A business stands and falls by its reputation with customers, and it\u2019s when times are hard that those who have taken the customer relationship for granted lose ground.<\/p>\n\n\n\n

In a survey<\/a> of more than 1,000 European CFOs in 2019, asking to consider how they might tackle a downturn, the most diverse and prepared respondents were \u201cfocusing on using advanced technologies to improve efficiency as they put their customer base under the spotlight\u201d.<\/p>\n\n\n\n

In the words of Customer Experience futurist Blake Morgan, writing in Forbes<\/a>: \u201cIt used to be that customer experience was the only way to differentiate your brand among a sea of sameness.<\/p>\n\n\n\n

\u201cNow the challenge is not just to standout, but to pivot, innovate and transform.<\/p>\n\n\n\n

\u201cThis is not the time to quiver in fear and count our losses, but be a leader in helping customers get back on their feet. We must learn to move quickly and in understanding the new experience customer mindset, we will continue to have customers.\u201d<\/p>\n\n\n\n

4. Manage profitability, not just cost<\/h2>\n\n\n\n

Consultant PwC has been surveying leading CFOs in its CFO Pulse surveys for many years. In recent weeks, cost-containment has certainly remained top of the CFO agenda.<\/p>\n\n\n\n

More than half of CFOs are deferring or cancelling investments. But in its 11 June 2020 Pulse report<\/a>, PwC says: \u201cFewer CFOs today than in past CFO Pulse surveys say they will consider cancelling or deferring planned investments in R&D (14%).<\/p>\n\n\n\n

\u201cThis is good news, given respondents\u2019 belief in the importance of developing new products and services.<\/p>\n\n\n\n

\u201cCFOs are also not as likely to cut from their planned digital transformation investment (11%), which corresponds to findings about their plans to accelerate automation.\u201d<\/p>\n\n\n\n

The point is that ruthless cost-cutting, while sometimes essential, also risks harming the future agility of the business \u2013 whether to develop profitable new products or profitable new methodologies that increase margin.<\/p>\n\n\n\n

5. Turbocharge your balance sheet<\/h2>\n\n\n\n

Three points to be aware of when it comes to your balance sheet.<\/p>\n\n\n\n

Minimise your accounts receivable<\/h3>\n\n\n\n

Every business is, of course, different. But services businesses with 90 to 120-day payment regimes are particularly prone to cash flow complexity.<\/p>\n\n\n\n

Focus on aging receivables and, as always, prioritise visibility of this data if it\u2019s not absolutely clear.<\/p>\n\n\n\n

Extend your accounts payable<\/h3>\n\n\n\n

Unfortunately, many businesses will find their accounts payable regime is not even in their own gift to change. You may well be being paid late (or not at all) further down the supply chain.<\/p>\n\n\n\n

If so, this will no doubt already have influenced your cash flow. Either way, have those crucial conversations about extending payment terms with your suppliers.<\/p>\n\n\n\n

Re-examine inventory<\/h3>\n\n\n\n

This may be conflicting: on the one hand, your supply chains may have been disrupted and you\u2019ll be planning to hold more inventory of some parts\/ingredients just to be able to service clients.<\/p>\n\n\n\n

Equally, if you have expensive stockpiles of other parts, this may be ripe for optimisation.<\/p>\n\n\n\n

6. Take part in a lively mergers and acquisitions market<\/h2>\n\n\n\n

The coronavirus disruption is an exceptional example of both crisis and opportunity. Business closures and bankruptcy programmes usually mean the writing off of debt and the availability of discounted assets; either wrapped in a potentially ongoing operation or piecemeal.<\/p>\n\n\n\n

And that\u2019s good news for firms either less affected by the pandemic, or those with solid cash reserves who might want to use that cash to buy other businesses to hedge their ongoing risk or capitalise on new opportunities.<\/p>\n\n\n\n

Consultancy EY therefore writes<\/a>: \u201cDistressed assets will need buyers. Even in the midst of crisis, it is not too soon for CFOs to be planning a recovery strategy focused on the upside.<\/p>\n\n\n\n

\u201cThis proactivity also applies to firms that emerge weakened by the crisis. Many companies may need to seek new partners, or to make divestments to raise cash.<\/p>\n\n\n\n

\u201cIt is important that the firm\u2019s fate is not dictated by outside forces. Instead, the CFO should step forth with a proactive strategy to navigate the recovery.\u201d<\/p>\n\n\n\n

7. Re-prioritise the mid-term portfolio<\/h2>\n\n\n\n

McKinsey writes<\/a>: \u201cMany companies have major capital ex and technology or platform investments \u2013big-ticket items that were made in a different time and different context.<\/p>\n\n\n\n

\u201cWe are seeing companies beginning to triage that book of work, figuring out things that are mission-critical and should continue, those that are more discretionary, and others where the ROI [return on investment] has to be re-evaluated given the current environment.<\/p>\n\n\n\n

\u201cA lot can be done in the near term to bring some science to the investment portfolio.\u201d<\/p>\n\n\n\n

Don\u2019t forget, of course, that:<\/p>\n\n\n\n