Six realisations for CFO’s amid our not-so-normal new normal – COVID-19

Written by: Mint Group CFO, Yvonne Dias

As lockdown restrictions in South Africa slowly start to ease, businesses are gearing up to continue operations. Simultaneously, CFO’s around the country are drastically increasing their caffeine intake, reducing their sleeping hours, flexing their fingers, sharpening their pencils, color-coding their highlighters, and doing what we were born to do: ensure business-as-usual.  

Decisions around business sustainability, balancing jobs vs cash flow, and dealing with uncertainty from a personal perspective all play a part in the daily life of a CFO amid COVID-19.   Also known as the “numbers people”, CFO’s are made from snips, snails and puppy dog tails … with some serious analytical capabilities and perseverance thrown in. Situations like these are what we are trained for – to understand, analyse and make tough decisions accordingly. 

The role of a CFO has never been more critical, highlighting the need for concise decision making and actions to ensure operational businesses that can adapt to our ever-changing circumstances. To achieve this, keep the following in mind: 

Plan, plan, and plan some more 

After being thrashed into the chaos of a global pandemic – which led to an inevitable lockdown, a completely remote workforce, and no access to wine or cigarettes – the first step we took as a company was to plan, remain calm, and plan again.  

Following that, we decided on realistic objectives among our new normal. We agreed that our core focus was People and long-term business sustainability. We then crafted our focus areas, assigned owners, and identified the required actions. Crucial to the effectiveness of this plan was clear channels of communication and responsibility with our workforce coupled with measurement criteria that are regularly reviewed. 

The areas of focus comprised:  

  • P&L views  
  • Revenue Decline ​ 
  • Sales Decline ​ 
  • New Normal  
  • Client Communication Framework  
  • Employee Assistance   
  • Cash Flow  
  • Costs ​ 
  • Go from good to bad

To ensure business sustainability, you need to be prepared for the worst, the not-too-special, and the best scenarios. As such, we created our worse, expected, and best-case scenarios and identified what measures would trigger what resultant actions. Team alignment, however, is crucial to the management of these scenarios, which are modified as circumstances change. Our plans and forecasts are living and breathing documents, and, in this new world, uncertainty is only certain.  

Say it loud and clear … and also cut some of it 

Amid these uncertain times, we ensured that we were very clear in our communication and actions, and most importantly, we did not have any knee jerk reactions. The finance team worked very hard in building, implementing and driving a cost reduction strategy and being savvy on cash flow. Firstly, any new items, such as our office expansion, were halted. Secondly, we changed the way we spend only spending on targeted activities. Thirdly, we also reduced all non-essential items as well as our hosting space, ensuring a reactive approach to financial management amid COVID-19.    

Be stingy, but smart 

We balanced our spending to ensure we get the most for our money. As an example, we reduced marketing spend to targeted spending only as opposed to cutting crucial branding activities. We have also invested in staff wellness, such as hand sanitizer stations, and are finalising our facial recognition access to the offices to ensure that our temperature feature is enabled when staff filter back.  

As mentioned, we are continuously reviewing and refining our spending and focus as our environment changes. Amid COVI-19, CFO’s need to be all-seeing Oracles – catering for every scenario and using our amazing finance tools as magic crystal balls.   

Realise that it’s a give and take 

While Mint as a company has made amazing social responsibility contributions to help those in need amid the current crisis, we also need to consider the resources available to us to ensure business sustainability should we ever need it.  

While all initiatives might not be applicable, CFO’s need to know what the government has made available:  

  • COVID 19 loan scheme – Businesses with an annual turnover of less than R300 million(measured at group level) will be eligible for a loan to cover specific operational expenditures of the business and will be drawn down monthly. These costs include salaries, rent, utilities, creditors, security and supply chain. 
  • PAYE holiday payment plans – SMEs will be allowed to delay 35% of their employees’ tax liability over the next four months a portion of their provisional corporate income tax payments without penalties or interest. 
  • There are also several options available to SME’s and initiatives regarding reduced hours and layoffs that CFO’s need to understand and see how they can work these initiatives into contingency plans, whether currently required or not.  

Embrace planning pandemonium 

How do you plan, forecast, and budget amid ongoing uncertainty? You shorten the cycles. Plans and strategies now take place in much shorter cycles, and that is ok. We need to be as proactive as possible and prepared as we have limited data to work with, with so many moving parts to consider. In some cases, we may be reactive but how we act is still the key. 

In summary, the key for CFO’s to keep their organisations up during an economic down-turn is to focus on what they can control: ensure that the basics are in place, focus on building client relationships, consider the right data points for your business, and accept that, even though we have always said that the only constant is change,  Rapid change. 

Plan to survive and make the most of current opportunities, and then plan to get to a new normal. Accept that that new normal is nowhere near what we previously thought was normal but might be very close to near madness. And when you feel like slumping into financial despair, remember the most important thing amid our not-so-normal new normal: we are all in this together. We are all Creating new Tomorrow, together!