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The corona crisis is hitting the global economy with full force. Entire industries are at a standstill worldwide. There is currently no end in sight. This also re-sults in enormous challenges for CFOs. But burying your head in the sand cer-tainly will not pay off. On the contrary. CFOs must become active and take risk management into their own hands. We will show you in this article, which 3 things need to be done now.
For the vast majority of companies, 2020 will probably not go down in history as a rec-ord year. On the contrary. The spread of the corona virus is not only causing major changes in public life, but also in the economy. But do not panic. The financial year of 2020 is far from over.
One trend that is currently strongly emerging is digitalisation in many areas of business activity. Home offices are moving meetings to the web, online shops and delivery ser-vices are celebrating a boom and collaborative working on the internet has become indispensable.
But digitalisation goes much further. In a global world, it is essential to always have a picture of the current situation. But as the flood of information is far too great for that, this cannot be done manually. It only works on the basis of data, properly pre-pared and made available. This is the only way not to miss any important changes with customers, and the only way to secure your supply chain and reduce cluster risks.
You have to keep an eye and thus an overview of data on the following 3 areas:
In the meantime, the corona crisis affects the whole world. While China Mainland was primarily affected at the beginning of the year, the virus has long since spread in Europe and also in the USA. This had partially massive effects on the economy. Large parts of the car industry, for example in Germany and Italy, are at a standstill, not to mention the retail trade.
It is therefore important to keep an eye on the market. It is obvious due to the daily incoming messages and the fast development, that this cannot be conducted manually. In addition, many companies operate globally and do business with suppliers and cus-tomers not only in Europe but also in America, Asia and Africa.
In order not to lose the overview, global monitoring is very helpful. If there is a change in a supplier, customer or interested party, the monitoring system shows an alarm. So you no longer have to keep an eye on every business partner at all times. If the finan-cial situation worsens or even improves, you will receive a notification. This will save you time for the important matters to get through the crisis unscathed and on top of that you will keep yourself much better informed.
In a crisis it is extremely important that you only do business with solvent companies. A close examination is therefore indispensable. For example, Dun & Bradstreet provides accurate and meaningful scores for this purpose, which we have described in detail in this article. The disadvantage, however, is that the scores are calculated on the basis of historical data and therefore only provide a limited indication of financial stability since the outbreak of the crisis.
This is where the payment experience pool DunTrade® comes into play. Many compa-nies feed their debtor data into this comprehensive network. Overall this results in a much more up-to-date picture of the ability and willingness to pay. This means you can see whether a company or consumer has reliably paid invoices in time since the out-break of the crisis. But not only that: DunTrade® even makes it visible whether your customer prefers you over other suppliers when settling invoices or pays them with lower priority.
On the one hand, this creates security when closing deals, but also shows potential in your portfolio. Because you certainly want to do business with those companies that prefer you in the payment process.
We have already described in our previous article that it requires strategies to protect your own supply chains. Both short-term measures such as risk assessment and ongo-ing supplier reviews, and long-term measures such as the development of contingency plans and the search for alternative suppliers are therefore required.
It is also absolutely necessary to know the hierarchies within the suppliers. If you know which companies belong together and who is an affiliate or subsidiary of whom, then you have better cards in your hand when negotiating conditions. But much more im-portant in a crisis: You can assess cluster risks much better. If a company ceases to supply, this will probably affect subsidiaries.