Finance Playbook

Sanitation & PPE Forecasting

As employees return to work, organizations will have to take additional measures and actions to ensure a safe, sanitary environment. These measures include enhanced sanitation efforts, the provision of personal protective equipment to employees and customers, and new processes like health and temperature screenings for those coming onsite. Costs for these consumable resources, as well as additional human capital where required, must now be included in all forecasting.

Remote Work Costs

While most of the attention on remote working has been in other functions like IT or human resources, the finance function should continue to evaluate if remote work is generating savings or placing an additional cost on the organization. Assuming organizations continue work-from-home policies, work may need to go into calculating the indirect benefits and costs in addition to the direct ones. For instance, does the additional productivity among employees who are happier working at home offset additional hardware costs to provide them with proper work infrastructure?

Focus on Cash Flow

During the shutdown, many organizations have focused appropriately on cash flow management. This will continue to be mission-critical moving forward as revenues will not return to previous levels immediately as the economy reopens slowly. Organizations should take three steps to improve cash flow management:

• Improve Customer Collections: Focus on reducing late payments, shortening credit terms, and ensuring error-free invoices.
• Optimize Supplier Payments: Lengthen credit terms on payments, stop any early payments, and move to the end of the accumulation period.
• Lower Inventory Levels: Holding less inventory should provide additional liquidity for the organization. By reducing safety stock and improving forecasting for the new environment, organizations will be best equipped to deal with cash crunches.

Scenario Planning

Organizations should continue to use dynamic scenario planning to test different reentry plans with estimates of their likely multiple outcomes. While the future is uncertain, sketch out business plans based on different virus patterns, a possible second wave of infections and quarantine, changing consumer habits and local, state and federal guidelines. Thinking through a variety of conditions now will help organizations move into the strategic execution of these plans more quickly as trends emerge over time.

Reporting

The legal requirements for financial reporting are still with us despite the current level of disruption. In fact, such interruptions can have several implications for reporting, such as fair value determination, reassessment of credit risk and recognition of insurance proceeds/government grants. Guidance for how to cater for COVID impacts upon fiduciary reporting responsibilities can be found in the KPMG guide below.

Chain of Command

The likelihood that key staff may become ill - of that their family members may - is a consideration for finance officers if they are part of the final approval process for decisions. Clearly determine how the decision-making process will be adapted in the event of absence or unavailability of key leaders. Are there designees that can be identified to support the business as a whole and its need to make swift decisions?

Changing Workplace

As the world transitions to the new normal, working-from-home will become more prevalent. Finance functions in organizations of all sizes will have to plan for the future of the remote workforce, the possible repurposing of office and retail space and the demands of consumers as conditions stabilize.

Grant Support

The U.S. federal government has started a variety of aid programs for businesses, such as the Payroll Protection Program (PPP). Details of these program can be found through agencies such as the Small Business Association. The State of Iowa and other area organizations have also announced forthcoming initiatives to help business recover.