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Proactive forecasting and dynamic financial planning will deliver an edge in the post COVID-19 era

In a crisis situation of COVID proportions, immediate priorities take over. Survival, safety and stability come first, followed by measures for long-term success. The chief financial officer (CFO) has many challenges but most of them fall within two categories – run the business and change the business. From budgeting and financial planning to handling revenue leakages; from compliance and regulatory reporting to profitability; from extracting synergies and value from mergers and acquisitions to shared services transformation – the sweep and influence of a CFO cuts across the entire organization. This far-reaching influence also means that investing in digital finance gives them the potential to transform the way they deliver value to the enterprise.

The first COVID-19 response of CFOs across industries has been to tighten cash controls by freezing discretionary spends and getting a full view of liquidity. With intelligent cash flow simulations, they can provide a real-time report on potential exit strategies out of the crisis. Such simulations also allow a discerning CFO to find potential targets for acquisitions. As business decision-making switches to real-time mode, accurate forecast planning and analytics (FP&A) plays a key role in ensuring competitiveness. Analyzing customer demand and supply-chain optimization is essential for the short term, while realizing the benefits of digital transformation is critical for the long term.

From Custodian to Futurist

TCS’ 2020 CFO Survey uncovered a new set of paradigms for the finance function. Most notable was a shift in the CFO’s role from that of a ‘custodian’ to a ‘futurist.’ From building the business case for new technologies and business models, to devoting more time to innovation and driving an agenda of cultural change, the emboldened CFO is laying a framework that will fundamentally change the way they – and their businesses – operate. Another insight driving the new-age CFOs is the emergence of instantaneous data and promising technologies that help them in forecasting and fast-tracking their 'data view’.

Proactive forecasting and financial planning that this visibility enables differentiates the ‘futurist’ CFO from the ‘custodian’ CFO.

Sifting the Agile Leaders from the Traditionalists

While digital technologies provide the tools of success, not all organizations –and CFOs – are best placed to take advantage of it. According to our CFO survey, agile leaders were able to access 90% to 100% of key operational and performance data, while the traditionalists were able to access up to 30%. Agile leaders were able to overcome challenges of workplace resistance and inconsistent data significantly better than their counterparts. There are also significant workforce-related issues that agile leaders proactively addressed in the area of dynamic financial planning and forecasting.

Another link that agile leaders established was between key performance indicators (KPIs) and financials. Real-time forecasting helps connect cause and effect in scenario planning and reorient reporting structures accordingly. Cash control and understanding the dynamics that contribute to such controls will deliver greater collaboration and predictability across the organization.

The TCS Promise – Help for the Long Haul

While this crisis has the potential to test and stretch many organizations, it is also likely to bankrupt a few leaky ones with liquidity and solvency problems. TCS can enable C-level leaders to make quick decisions to transform after the immediate impact of the pandemic stabilizes. Tight and diligent collections, renegotiation of terms and conditions with suppliers and puritanical spend management will be necessary. Intelligent capital deployment, inorganic growth through discounted M&A and divestitures will set them up for a rapid recovery.

Over the years, , M&A advisory and execution, and shared services transformation among others. 

If you would like to transform your finance function, please write to Sridhar Loke.



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