Current operational challenges faced by finance leaders:

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    James Burt, Office of Finance Director – Oracle Australia & New Zealand

    “If you want something done ask a busy person”.  We have all heard that quote and, of late, Finance staff have become very busy as they deal with ramifications from the current business environment. Below I have suggested some of the priorities that are keeping them busy at this unique time.

    Health and safety

    A top priority continues to be the health and safety of employees; for this reason, most finance functions will be working remotely.  Many Finance leaders will have additional responsibility as members of crisis management and business continuity teams, as well as needing to attend extraordinary leadership, board or general meetings.

    Cashflow

    Most businesses will be looking to preserve cash to build a buffer to see them through the next few months. They will be identifying and then stopping all non-essential services and tax payments.

    To maintain relationships Accounts-Payable staff will be busy communicating with suppliers to negotiate an extension to payment terms.   Similarly, Accounts Receivable will be trying to collect cash as soon as practicable.

    Inventory levels need to be controlled tightly as demand and supply plans are updated. Some businesses will have a considerable stockpile of raw materials as customer orders dry up.  Alternatively, materials may be running out, either way they will be urgently managing a degree of havoc. To understand and mitigate risk Finance leaders will be working closely with their supply chain colleagues.

    Forecasting and planning

    Modelling the direct impact on forecasted sales and costs will be a top priority.  Detailed understanding of this, with the situation changing so rapidly, may require daily updates. All the while new budgets and forecasts will need to be produced. This will be very time consuming especially if done without the help of best practice tools and processes.

    Banking and treasury

    Ensuring the support of banks will be essential for most businesses.  Banking covenants and a host of financial instruments will need renegotiation.

    Furthermore, large movements in currency and lower equity prices could be causing problems e.g. where hedging was not adequate or lower valuations have triggered a margin call or a breach of a bank covenant.

     Insurance and contracts

    A few far-sighted businesses will have the necessary insurance to cover a pandemic; however, most will not.  Finance teams will need to be across this to understand the fine print on these and on other contracts (such as leases and supplier contracts) to assess the potential impact on cash flows.

     Communication

    Timely, honest, well-considered communication to all employees, customers, suppliers and other stakeholders is essential. Listed companies have the extra burden of making disclosures related to the coronavirus.

     Control and governance

    On top of this Finance leaders will need to be reviewing the risks to the control environment – reduced staffing, remote working, system issues will all increase risks around segregation of duties, delegations and workflow approvals.

    New authority schedules may need to be published to establish tightened control over expenditure.

    Alongside all of this will be a heightened cybersecurity risk to be managed. Already there have been reports of increased phishing from emails too easily clicked on as employees seek the latest news update.

    Then, just when they thought they were going home, Finance teams will be trying to complete their normal day job; remember that if you can from a world just a few weeks ago.

     

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