Finance: A 3-Layer Approach to Managing in the Coronavirus Limbo

Written in collaboration with Jim O'Connor, Tom Willman and Vin Kumar, Principals at The Hackett Group's Finance & GBS Advisory Practice

Several weeks into the Covid-19 pandemic, we are seeing organizations shift from crisis mode to evaluating their reemergence scenarios. Many clients have launched “SWAT” teams to focus on specific areas, e.g., revenue, operating expense, cash flow, capital investments, to plan for the potential impact of different scenarios on the business. We are also seeing companies evaluating different return-to-work alternatives and their implications on policies, people, workspace layout, etc., for multiple geographies and locations.

Different levels in the finance organization are focusing on different aspects of the return to the next normal: 

Leadership

Finance leaders are thinking beyond the immediate as they prepare for Q2 and beyond, based on different restart scenarios, e.g., U- W- or L-shaped recovery patterns. They are:

• Running scenario planning for Q2/Q3
• Developing worst-case and minimum-viability scenarios for the rest of the year, e.g., what would happen if 25% of the workforce in a specific location is out due to illness, or recovery is hampered by different restart activities in different countries
• Reviewing capacity to prepare for a potential rise in demand (or continued softness)
• Monitoring the regulatory impacts per country, so they remain compliant with local rules
• Considering how to prioritize cost optimization initiatives

Delivery Group/Operations

Our conversations with clients reveal that most finance operations teams are:

• Performing day-to-day responsibilities on a business-as-usual basis
• Capturing and practicing lessons learned from a challenging monthly/quarterly close
• Operationalizing improvement opportunities that surfaced during the initial weeks of the crisis (e.g., aggressively pursuing automation and digitization internally and with customers/suppliers)

Transformation Teams

While some organizations have made the decision to halt, slow down or defer project work, many are continuing to work on finance transformation and technology implementation initiatives. They are:

• Evaluating their portfolio of initiatives to determine which will move forward as planned, which projects may be delayed and the implications on resourcing and timelines
• Pursuing or even accelerating efficiency-driven initiatives
• Increasing emphasis on process and business model innovation opportunities emerging from the crisis
• Helping operations teams to implement targeted improvement opportunities

While the Covid-19 crisis is by no means over, there are signs that the economy will begin to reopen later in this quarter or early in Q3. It is time for finance leaders to assess different economic scenarios within the context of their business and industry.