The COVID-19 pandemic continues to affect business and the economy and will continue for some time. But exactly how much remains unclear and tax officials need to plan to deal with this uncertainty.
Most companies are not equipped for what lies ahead, especially when it comes to planning. Three out of four CFOs admit that their planning process has not prepared them for economic and geopolitical disruption, let alone a global pandemic.
According to a recent study by the Association of Financial Professionals, three in four financial planners and analysts (FP & As) rated the “information uncertainty” caused by COVID-19 as having a significant or moderate impact on their organizations.
This uncertainty means that financial teams need to be more agile to help their businesses succeed. Even under normal circumstances, flexibility is a characteristic of a company that can better anticipate the future, act swiftly and decisively to meet customer needs, market changes, and the threat of competition.
Agility has now become the main characteristic of organizations that are able to react to this crisis and set a new, sustainable path for the future. That’s why relearning some knowledge bases of the business world can help you greatly in preparing for the future. Go to OnlineCourseRank for the best online business courses of 2020.
Finance is the key to agility
However, the company still faces challenges. From March 23-27, as clogging orders to the US and the impact of the pandemic increased, customers using adaptive workday planning processed up to 30 times more forecasts and scenarios than a typical week. This means that companies have stepped up their planning and re-planning as conditions change rapidly. Since the pandemic began, Workday has seen an average increase in modeling and recalibration of 15x as companies seek to understand the impact the global pandemic has on their business.
Financial institutions are key to flexibility for all companies, as the financial industry naturally stores financial and operational data. Because it affects every aspect of a business, funding is driven by budgeting and forecasting activities that essentially create a road map for that business. Following are three main planning processes that finance can implement to support business flexibility in times of uncertainty.
Scenario planning. Think of scenario planning as if you were harnessing the power of what-ifs. The planning platform allows you to model multiple scenarios based on competitive threats and supply chain disruptions to natural disasters, war and pandemics. Since no one has historical data on a pandemic, it is important to start scenario planning with relative ease. Model some of the top line items, such as: B. New sales, store updates, and quarterly upgrades to existing customers throughout the year. Consider a number of possible scenarios for your business, maybe 50%, 65% and 80% of the prepandemic plan.
Sustainable planning. In a volatile market, few things are more important to business flexibility than a plan that is relevant to what’s going on. Static annual packages, which often have limited value when traversing the environment, do little to deal with the black swan event that blinds everyone. The antidote to episodic planning is ongoing planning. When it functions well as part of sustainable planning, planning is not a moment in time – it is sustainable. With faster planning cycles, budgets emerge that adapt to changes and changes in business and markets. In an environment of active and sustainable planning, budgets aren’t frozen – and they never go out of style. Companies that use sustainable planning are 1.5 times more likely to predict market changes in a week and four times as fast.
Delay estimates. Moving forecasters provide a way to adjust direction quickly, with enough insight and confidence to make important decisions in a timely manner. Nearly 30% of tax officials surveyed by AFP said they expected the latest estimate. The mobile predictions are modeled by the driver, not the details. They usually forecast the next four to eight quarters. By providing a continuous forecast for a certain period of time, reality keeps evolving every month. This makes it easy for decision makers to see what’s happening in real time. The moving forecast also has consistent horizons. In contrast to the quarterly forecast, which is shortened by a one year horizon, the moving forecast horizon remains constant.
The chance to get out of the crisis
With countries, companies and communities reopening amid the ongoing pandemic, companies that remain flexible are best positioned to take advantage of opportunities and take on challenges.
With ongoing uncertainty about when vaccines will generally be available and pandemic status varying by region, companies must remain flexible. The recovery will come at different times in different industries. The hotel industry has been hit hard and the recovery will be “widespread and volatile,” said McKinsey. Other industries, including electronic commerce, did well during the pandemic. Ultimately, companies that have planned flexibly in response to the pandemic are well positioned to capitalize on opportunities during the recovery period.
Comparisons are being made between the effects of the pandemic and the effects of the financial crisis from the Great Recession more than a decade ago. Then many companies emerged stronger than ever to enjoy years of growth. Today financial leaders also see a silver lining in the current situation. PwC surveyed 330 financial managers in early June and found that the majority (72%) believed they would be more resilient and agile in the long term, and 53% said new ways of serving customers would lead them to better positions. on the road.
More than ever, flexibility will help companies recover from the pandemic and thrive.