The CFO'S Perspective

The current economic climate, combined with the fact that September is National Preparedness Month, has many of us thinking about how we can prepare for possible threats and business disruptions. This kind of strategic planning allows a business to approach a worst-case scenario with a growth mindset instead of fear – increasing the likelihood that your business will come out of a crisis stronger for having gone through it.

During a worst-case scenario, leadership must decide whether the organization will make the necessary adjustments needed to continue with business as usual or change how the company will operate. And while the conversation will undoubtedly include operational and capacity considerations, it is primarily a discussion about financial capabilities.

Effective cash flow management requires careful control of both money coming in and going out. While practices like shortening payment terms, offering variable pricing, and pursuing collections can increase the timeliness and amount of money coming in, delaying payments to vendors can slow cash outflows, providing the float needed to sustain operations during difficult times.

In an article about re-opening your business, Jeff Dunn explains succinctly, “Determine which vendors are critical to your day-to-day operations and pay them as timely as possible; which are important but can be paid slowly; and which are not important going forward that will be paid when able.”

How do you decide who to pay now and who to pay later, and how do you abide by vendor management best practices while doing both? This quick guide will help you answer those questions to improve your cash flow position right away.

The current economic uncertainty has many businesses closely evaluating their current and future staffing needs. While some positions are being cut, especially in the hospitality and travel sectors, many businesses are strategically hiring financial professionals into executive leadership positions during the downturn.

Companies that previously had tasked their CEOs with handling finance functions are now hiring dedicated CFOs (or outsourcing CFO roles to reputable third parties) to ensure they will be able to weather the new economic storm. With ambiguity over how long businesses will need to keep their offices and storefronts closed paired with unpredictability in the stock market, business owners and CEOs are feeling increased pressure to make critical strategic financial decisions for the health of their organizations.

This is an uncertain time for business owners.

Difficult questions like deciding whether to pause operations, continue a lease, apply for a loan, or lay off employees, are on the minds of business owners across the country. Many are confused about their tax obligations in the face of new legislation. Most are worried about maintaining proper security and managing communications effectively with a larger percentage of their employees working remotely. Some are concerned about how they will repair the brand damage that is occurring as a result of not being able to fulfill their brand promise to their customers.

Frequently shifting state and local regulations have left the waters murky for many businesses, especially in highly seasonal industries. Some business owners may be wrestling with the question of whether their businesses will be able to reopen at all after the shelter in place orders and social distancing recommendations have been lifted.

There’s nothing wrong with taking your business in a different direction. Some of the world’s most successful companies started out doing one thing and ended up succeeding at something else. Cell phone giant Nokia began as a rubber bootmaker, and oil conglomerate Shell was an importer of actual seashells. 

You can certainly reinvent yourself at any time, and sometimes it’s the best idea to guarantee success and longevity. But have you considered all of the risks and possibilities as you plan your roadmap for the next chapter of your organization’s growth?