Ways That Finance Professionals Can Stay Ahead Once the COVID-19 Crisis Subsides
COVID-19 has made financial planning more difficult than ever.
Top finance professionals who are used to dealing with accuracy and consistency find themselves in the midst of unclear economic conditions, especially as the pandemic is still very much with us right now.
The best Finance Directors, and their teams, understand that five-year-plans are not an option for many businesses, depending on how their sector has been affected by the COVID-19 crisis. They know that panning during such an uncertain period needs to be clearly thought out, step-by-step if a business is going to progress post-COVID.
Essential steps of financial planning for a business
The planning process that is put in place will help top finance professionals to stay ahead once the COVID-19 crisis begins to subside. There are five specific steps that are integral to this planning.
- Determining a clear picture of the current situation. The most proficient teams are working with cross-functional experts to study the market trends and indicators, in conjunction with current financial plans, to get a sound view of the business’s current position.
- Modelling different scenarios. Finance professionals are using the base information they have about the current position to model scenarios, one based on an optimistic view, one on a pessimistic view, and one on maintaining the current trajectory. Testing these scenarios leads to a conversation involving the financial planning team and the Executive Team to determine which scenario is the best option as the basis for planning.
- Determining the direction of travel. Once scenarios are in place, the financial planning team is integral to determining the direction of travel for the business. For example, this could involve restructuring or reshaping the business to suit new customer requirements.
- Identifying initiatives. Having a solid foundation for planning in place, top finance professionals will collaborate with the senior leadership to develop initiatives based on the current financial plan and new initiatives that are now essential as a result of the crisis.
- Closely monitoring the liquidity and earnings of the company. This is something that diligent finance professionals are used to doing. However, now it’s more important than ever to ensure the resilience of a business’s budget and spending, as well as the performance of the market.
Taking the relevant steps is helping forward-thinking finance planning teams to stay ahead of the current situation. However, they also realise the danger that potential fraud represents right now.
The dangers of fraud
There is no doubt that the pandemic has opened the doors to additional pressures from fraud. According to a report by the Association of Certified Fraud Examiners (ACFE), 68% of anti-fraud professionals have noticed an increase in fraud from the start of the crisis.
While businesses often tend to concentrate on policies and formal processes to address fraud, this does not necessarily impact compliance as much as it should. Financial compliance experts understand that fraud can start small and that genuine people can do bad things in some situations. This is why they know how important it is for businesses to address the psychological aspect of compliance.
- What causes people to justify committing fraud?
- Is there a culture where people can speak up about potential bad practice?
- Are there any warning signs of potential opportunities for fraud that people may slip into?
Embracing the psychological factor in reducing fraud helps to reduce risk.
It’s clear that the best performing finance professionals will be able to stay ahead post COVID-19 by initiating proactive financial planning and understanding the psychology of fraud in order to reduce risk.
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Date Posted: March 19th 2021
Posted By: Phil Scott