Finance Can Lead the Transition to the Post-Pandemic Phase
Since early 2020, finance leaders have played a critical role in containing the impacts of COVID-19-related disruption on their businesses. With the onset of the pandemic, as recession loomed and economic volatility escalated, CFOs and their teams shifted into crisis mode — redirecting their focus toward maintaining and boosting liquidity through creative management of short-term credit, cash flow, and resources.
Now, though, it’s time for CFOs to turn their attention to the next phase. As the economy continues to recover, finance leaders should shift their efforts from keeping the business afloat back to helping it grow. This will involve assessing longer-term impacts from the pandemic and adapting to a business climate of continuing uncertainty. CFOs need to establish post-pandemic financial priorities and determine which operational methods and tools will be most useful in meeting the new requirements of global commerce.
This white paper provides constructive advice for finance leaders trying to decide which actions are the right ones to take during this transitional period. We’ve laid out five carefully considered, practical, data-driven steps to help CFOs reorient their operations to capture and promote new growth in a climate of persistent unpredictability. Here’s a preview:
Step 1: Take Stock Today
Start conducting some basic analyses from both an internal and external perspective. Are there customers — or even entire segments of customers — who are struggling to make payments? Looking beyond your internal payment behavior data, it’s helpful to try to get answers to questions such as “How are these customers paying their other suppliers?” and “Who will continue to be able to pay us on time?”
Step 2: Minimize Risk
After assessing overall portfolio risk, begin to take specific actions at the customer level. Immediate steps may include prioritizing or delaying collection efforts or adjusting credit limits for accounts flagged as high risk. For new customers, the credit team should look to third-party data for additional insight. The white paper explains the importance of accurate customer identity verification and corporate hierarchy data in calculating risk exposure.
Step 3: Automate Processes
One of the best ways to ensure systematic implementation of risk mitigation criteria is to automate processes to the greatest extent possible. Automating credit-to-cash processes also helps increase the overall efficiency of the finance organization. Since automation relies heavily on accurate data, specific automation efforts will depend on how far the organization has come on its data management journey. The white paper includes a Data Management Maturity Matrix to help benchmark data management capabilities and also outlines several of the main building blocks of credit-to-cash automation.
Step 4: Position Your Organization for Growth
Finance can start promoting a growth mindset by demonstrating how its automation initiatives reduce decisioning turnaround time and speed up overall operations. Finance can also help sales and marketing support customer retention and cross-selling by scoring, modeling, and predicting customer behavior and needs. To improve efficiency of marketing campaigns, finance teams can score prospects to refine targeting and evaluate future ability to pay. And top-performing current accounts can be encouraged to increase order size and frequency with higher credit limits or more attractive payment terms.
Step 5: Pursue Innovation Beyond Finance
As suggested in Step 4, finance can share its data and analytics with partner functions in ways that benefit the wider business. One altruistic suggestion is to return any budget gained from reducing finance’s operating costs to the business to fund strategic innovations. These larger, costly projects tend to get cut first in harder times, but often prove essential for preventing stagnation, outpacing the competition, and increasing business resilience.
Download the White Paper: Recession and Recovery — How Finance Leaders Can Prepare the Business for What’s Next
The main challenge for businesses at this point in time is to balance uncertainty and opportunity. It’s not going to be easy, and it requires careful planning and strategy. The requirements of this balancing act may convince some finance leaders that it’s best to take a wait-and-see approach. But while the conservative view isn’t necessarily wrong, the opportunities that exist within the current circumstances are actually a gift to finance teams looking to pull their companies ahead of their competition.
Read our white paper to learn more.