No doubt, the Covid-19 pandemic has affected all of us in the worst possible way. Becoming the most disastrous virus outbreak of the century it affected almost every sector starting from education, entertainment, food and beverage, automobiles, to travel and aerospace. With a notable amount of people losing jobs everywhere, it is high time for corporate executives to focus on strategies to remain afloat. As the sustenance of an organization and effective financial management go hand in hand, to ignore the later stays out of the question. As per a recent report, the average stock price exchange for the commercial aerospace sector declined to -46 percent due to issues related to near-term-cash-flow and unpredictability of long-term growth. Similarly, the oil and gas business along with the automotive sector faced a downfall of -42 and -29 percent respectively due to disruption in supply chain and production.
This undesirable situation requires some serious yet firm steps to be taken by the CFOs and finance team of the company to avoid any kind of detrimental happenings in the near future.
- Get the Complete Blue-Print of Current Financial Situation
Take a while to ponder over the facts and scenarios representing your performance after the pandemic hit. Comparing the results with your pre-pandemic results, try to create a strategy to address the issue. Refer to the rate and duration of your company’s demotion and frame a plan to achieve desirable acceleration in your financial graph.
- Develop a Strategy Complementing the Economic Distortion
If the statistics imply a slight decline in the economic stature of the company, you might need small and non-structural changes to bear the effects of the pandemic. However, if more than 50 percent of your sales and production have been hampered by the pandemic then you might need to organize your entire cost structure and business model. Take consultation from a CA if needed for far more promising guidance and results.
- Identify the Core Areas to trigger Business Growth
Monitor the liquidity and sales statistics of the company along with the changes in the market. Organize a financial team that will keep track of the modifications ensured in the plan and how much it has benefitted to the company. Go for the extra mile by modeling different scenarios, to achieve desired outcomes. Take new initiatives to increase the sale and production process which will help the organization to shift from the crisis phase to the new normal.
- Strengthening the Productivity
With proper planning and budgeting arrangements, the organization should focus on enhancing productivity and preservation of the economy. This will improve the quarterly returns of the company and optimize the asset portfolio of the organization. Apart from that, there should be strict monitoring of KPIs to extract data for implementation of real-time decisions.
- Enhance Productivity through Digitization
It is very much clear that the limitation of a company to physical dimensions is obsolete as the global pandemic has compelled us to work remotely for the unperturbed flow of business. The utilization of digital tools and equipment for financial management in an organization should not be considered as a one-time event. The continuation of digitization in managing the financial problems will continue even after the pandemic to ensure accurate analysis and reporting along with informed decision making.
Although we all are currently experiencing the severity of the coronavirus outbreak, very soon the usual pace of the industry will resume. Amidst this economic crisis, effective financial management indeed is the best option to concrete the stability of an organization. Therefore it is necessary for the financial teams of every organization to analyze the financial steadiness of the organization at regular intervals and respond accordingly.