Manage the Corona Impact

An Action Plan for CFOs and Finance in Uncertain Times

How to manage finance in challenging times

The financial health of the company is indispensable for ensuring continued business operations during the crisis. This involves communicating with external stakeholders such as banks, regulators and shareholders as well as orchestrating collaboration within the company. Not only the core finance functions, such as treasury, controlling, accounting, and tax, need to work closely together. Ensuring liquidity and overall financial stability is a company-wide effort that needs to be orchestrated by finance. Besides managing liquidity and profitability, it is the finance functions' role to continuously provide transparency on the development of essential performance indicators. Now more than ever, fulfilling the business partner role by providing decision support in rapid steering cycles to management, is key.

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Essential levers – Actions to be taken by business leaders

Ensuring liquidity and setting up crisis performance management need to happen as soon as possible in the first phase of a crisis to "organize survival mode". The following levers are key:

  • Continuously track liquidity, credit lines, and covenants
  • Evaluate freeze of CapEx investments and external payments
  • Set up crisis communication with external stakeholders and evaluate requirements for government support
  • Assess working capital and monitor default risks for receivables
  • Establish crisis reporting for daily steering cycles

Once this is accomplished, further measures to safeguard financial results should be taken in the second phase, "stabilize the business":

  • Provide scenario modeling and simulation capabilities to effectively support management decisions
  • Focus analysis capabilities on urgent topics
  • Adapt performance management processes to the crisis, e.g. with increased forecasting frequency
  • Track implementation levels of measures

Last but not least, in the third phase, aligning steering instruments for a new path is the basis for "resetting the course". Therefore, steering instruments should be adjusted to potential business model changes and support scenario modeling for portfolio decisions. In the finance area there is also an opportunity to use momentum:

  • Continue to digitalize the finance function
  • Stick to measures (e.g. reports) that have proven essential in the crisis and re-evaluate necessity before going back to old finance "service portfolio"
  • Further integrate financial and operational steering

Success factors for resetting the course

To help management navigate and cope with the crisis, three core elements are essential:

  • No "silo mentality": ensuring liquidity and managing working capital, as well as prioritizing, implementing, and tracking improvement measures requires strong cross-functional collaboration
  • Strict focus on essential finance tasks helps free capacities to effectively meet additional analyses needs
  • Clear and frequent communication with external stakeholders and within the finance community

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