How are you? It’s a question we ask every day about each other’s families and health, work or business situation, finances and concerns. The world is still coming to terms with the impact of COVID-19, which continues to change everything about work and life as we know it. As strange as they are for many, people are learning to follow guidelines on social distancing and isolation. In these first few weeks of the crisis, many of us have rightly been focusing on the urgent business at hand – making sure our people are safe, activating our contingency plans, figuring out how we are going to operate over the few next weeks, or months given the uncertainty that surrounds this pandemic.
Organizations, too, have needed to accelerate their actions to protect employees, customers, suppliers, and financial results. The challenges are many and varied,
- cash isn’t just king—it’s now critical for survival.
- digital connectivity is now fundamental to the continuity of business operations, as remote work becomes the norm across much of the globe.
- necessity for frequent, transparent communication with colleagues and investors has increased as business conditions and rules of conduct change very frequently.
Agile is touted as one of the best, most important work methodologies, but how does it apply during the pandemic? In what ways is it relevant (or not?) through a crisis like the one we’re facing brought on by COVID-19? The agile mindset has significant benefits at any time, but these are especially impactful during this period of uncertainty. There are a few reasons why:
a) Agile brings a pattern for work. When things are ambiguous and nothing feels certain, agility provides for regular patterns to move work forward. Whether you’re doing a virtual daily stand up with your Finance team or reviewing your forecasts, work plan, etc. daily or weekly, these rituals are positive and bring a sense of much-needed normalcy than working in fire-fight mode.
b) Agile allows quick repositioning. When organizations need to make adjustments to priorities, approaches or the content of work, agile is well-suited. Use the agile method to “dissect” work—break it into small unit. Completing tasks bit by bit provides the opportunity for more in-course corrections. When situations change—as they do regularly through the coronavirus crisis—agile allows for easy shifts because work has been planned in smaller portions and over shorter time horizons.
c) Agility empowers team. Another hallmark of agile is team work and finance team members who make decisions in the moment rather than asking for permission or waiting for managers to weigh in. With the COVID-created pressure on many systems to react even more quickly than usual, this kind of approach makes sense.
Most Finance leaders and their teams are already attributing agile traits by moving quickly to quantify their companies’ cash on hand as well as any incremental capital they can access.
a) With many customers delaying payments, some companies may need to double down on collections to remain solvent.
b) When working capital is no longer sufficient, finance leaders should consider tapping lines of credit and other options while reviewing opportunities to raise capital. If necessary, they should also seek relief or moratoriums on debt covenants as early as possible to strengthen the balance sheet before doing so becomes a matter of survival.
c) With much of the world in lockdown and demand falling, it will be necessary for finance leaders to take decisive actions for reducing operating costs, but it will also be critical to balance those reductions against the eventual need to scale operations back up as the economy recovers.
d) The finance team can also bring some rigor to spending management by implementing rapid control for all discretionary expenditures, such as indirect procurement.
e) Rolling cash forecasts are to be more aggressively tracked and should cover both macroeconomic and company-wide data with risks identified.
This is the first economic disruption that requires a large part of the global workforce to perform their duties remotely, making digital-collaboration tools necessary to keep the business functioning.
a) Finance Transformation has been a key finance leader’s requirement for many years and to move into a more virtual world of intelligent user interfaces, finance applications and technologies, COVID-19 has created a necessity to crack and apply these with full force.
b) The finance team’s use of digitization to help the company manage the crisis should not be considered a one-time event. Digital initiatives that once seemed out of reach—from automated closings to real-time forecasts—are now business critical. The finance team can codify the solutions they have developed—the cash lookout, rolling forecasts, and collaborative dashboards, for instance—and help scale them throughout the organization.
c) In order to adapt to a new, remote workforce, ensure that digitised solutions are:
- 100% cloud-based and allow 24/7 access for finance teams.
- Have strong financial controls so that WFH does not expose your company to greater fraud, tax, regulatory, and audit risk. Manual processes, for example, paper-based invoice approvals and check writing, are inherently risky, especially when being performed away from a controlled office.
- 100% digital and logged approval workflows or processes.
- Have multi-subsidiary capabilities that allow a distributed organization across various geographies to continue to function as normal.
Another area which is equally critical is to communicate proactively with Customers, Suppliers, Employees and Investors. The message should focus on the crisis’s actual and projected effects on the company, the actions being taken to protect the business, the liquidity situation, and any changes to earlier earnings commitments.
- In the coming days, weeks, and months, as employees are struggling with anxiety about their health, their future, and their loved ones, finance leaders must demonstrate empathy—but also bounded optimism that the organization and its people will find a way through the crisis.
- The finance leaders can back up with clear actions and decisions. Regular communication is critical: the leader must be forthcoming about the “knowns” and the “unknowns.” This will help ease misgivings, decrease distraction, and keep company stakeholders motivated. Also critical is empowering others in the finance organization to direct aspects of the crisis response while establishing a financial decision-making framework that will help executive peers make necessary trade-offs.
COVID-19 will remain one of the most significant events we have experienced in our lifetime and the root of the most uncertainty that people and businesses will face in the next six to twelve months at a minimum.
As we start to settle into this new normal, it is becoming increasingly clear that much of the ‘knowledge’ work doesn’t need to be done face-to-face. Technologies like Zoom, Google Meet, Flock, Mural, Slack, Microsoft Teams, and many more enable many of us to perform agile financial processes form home. Agility is also about how quickly we adapt, to become more comfortable with the idea of being “remote” – where we can discuss and make decisions without physically being in the same room, or equally as important, accessing day-to-day social and support systems over technology.
Agile can help us succeed today and in the new normal post-COVID. It is especially valid because the world is no longer based on individual work and the agile mindset embraces teams. Our current conditions require a calm response to complexity and agile empowers us to be our best in the face of uncertain times. It’s time to get back to basics and create our own playbook for navigating your unique company through COVID-19.
“Fail early, fail often, but always fail forward.” – John C. Maxwell