These are the times where building resiliency is the best, or rather the only way, to respond to the current pandemic situation. It doesn’t make a difference if we talk about it from an individual or organisation’s perspective.
Considering my finance background, I will discuss the importance of building resilience with financial readiness and rising to the challenges of uncertainty.
At the time of this crisis, where uncertainty takes centre stage, organisations are looking at the CFO to ensure business continuity. A crisis always presents an opportunity for an organisation to learn about their structural weaknesses and address this in a systematic way to emerge even stronger.
CFOs are facing multiple challenges - some are known but some are unprecedented and require novel responses. Most of the CFOs I speak to have reported multiple immediate challenges and priorities on the technology front. These can be translated into four broad categories as outlined below.
CFOs expect technology solutions to build a coherent strategy to deliver on these priorities while ensuring the technology tools they select during these times, are relevant and applicable in the future as well.
Liquidity and credit risk
Cash has always been king and this saying was never so relevant as it is in the current situation. There is no business continuity without secured liquidity and cash flow. Problem statements revolve around credit risk volatility, cash shortages, merging liquidity constraints as well as the absence of a proper hedging strategy.
Further uncertainty comes from capital markets, for example, currency exchange rates, interest rates and commodity prices; impacting near term liquidity situation. Automation of treasury processes is of utmost necessity, not only to save costs, but also to ensure timely and accurate payments in an environment where treasury employees no longer work in the same physical office.
For example, making a manual payment which requires physical signatures of several employees can become a significant challenge in the current work from home environment.
In order to ensure and maintain liquidity, technology is expected to provide real-time cash flow visibility for critical decision making across the organization. The payment process should be seamless with inbuilt digital signatures which automates the entire process to minimize any fraud risks.
Finance close continuity
Organisations are struggling with their financial close process in the current crisis. Processes that have been deemed competent are now posing a significant challenge in remote environments.
The challenges revolve around difficulty working with teams spread across different time zones and sometimes across systems. All these challenges can easily turn a seemingly good enough closing process into a financial governance nightmare.
A CFO’s priority, from a technology perspective, is to have a platform to enable team coordination with access to real-time information and increased automation to be more productive.
On one hand, there’s an expectation to streamline accounting processes, delivering efficiency, insight and trust.
And on the other hand, trust is good but, controlling the process is even better, so CFOs are looking for a solution platform which enables their finance team to collaborate closely to meet deadlines of closing process while spread across multiple locations.
Access governance and security aspects
Many employees are working from home and need remote system access which on one hand is convenient but on the other hand preserves the integrity of the corporate systems. Some team members may have to substitute peers and require additional system access on very short notice. Application security remains at top of mind to combat increased risk of cybercrime from home.
The expectation from technology is to provide agility and security for new workforce models with proper monitoring and controlled user access to safeguard security. Technology should simplify access and automate administration in order to reduce cost and monitor user activity to identify potential cyber threats.
Stabilise international trade
It is an important imperative for CFOs to stabilize international trade amid rapid and turbulent changes. The current situation has led to a dynamic re-routing of entire supply chains either because the suppliers have challenges in delivering their products or the companies have dynamically adapted their product portfolio to meet the changing economic conditions.
These reasons may require companies to change and dynamically reconfigure their supply chain functions. Any global crisis always has the potential to disrupt the global supply chains.
There’s an expectation from technology to have agile sourcing models, new supplier risk, maintain trade compliance and assess impact of duties and tariffs. CFOs need technology to help screening of trade partners for restricted parties to manage reliable inventory and new sourcing opportunities securing the supply chain.
At SAP, we are constantly guiding the CFO community and the finance business fraternity to respond to these immediate challenges by streamlining the processes for treasury and cash management, finance close, remote access governance and providing an agile international trade compliance platform using the best in technology.
The key priority in these uncertain times is to enable the CFOs to build resilience with financial readiness while maintaining business continuity and emerging from uncertain times even stronger. And yes, this formula will stick in the next normal as well.
About the author
Amit Verma is Regional Director, Office of CFO Solutions at SAP Asia Pacific Japan. You can find his bio below.