In the wake of COVID-19, businesses must remain agile and disciplined, which requires making finance teams fully operational out of the office. Consero’s President Bill Klein offers a few key tips on how to do just that.
As much as “black swans” have become a business cliché, by their very definition, they can’t be predicted. COVID-19 certainly fits the bill, and it’ll be some time before we understand its true impact. But businesses don’t have the luxury of standing still, as they have to manage multiple contingency plans to cope with whatever comes next.
Those plans rely on an accurate view of the company’s health, which means finance and accounting teams have to be fully functional, even from home. “At a time like this, decisions have to be made quickly and that means updated, accurate information is vital,” says Bill Klein, President of Consero, a provider of outsourced Finance-as-a-Service solutions.
Klein believes that finance teams need more than remote access to the numbers; they have to be able to perform key operations from wherever they are. Weekly check-ins with the finance team will help make sure the numbers have been verified in real time. When these teams are working as they should, senior management will have time to focus on various models and contingency plans for cash management, which is the core priority now. And any readiness plan needs to be tested, ideally by several people over a week or so. Even if a business has to build that remote capability on the fly, there are some key guidelines to keep in mind.
Obtain a digital finance function with remote access
Klein names two core priorities in building a remote finance team:
- access to systems and underlying information
- the ability to complete accounting tasks from that remote location
“Now when people think of remote access here, they’re usually thinking of access to a web-based accounting system, but I’d argue they need to go one step farther and make sure there’s access to supplemental information,” says Klein. “If a vendor bill comes in the office, where does it go? Can the team access that remotely?”
Any relevant information, from vendor bills to customer contracts, needs to be accessible, and that involves thinking through the entire activity cycle of the finance function, to make sure there are no blind spots, no answers that are only available in a hard copy, in a file drawer, somewhere on the twelfth floor. But access to information alone isn’t sufficient.
“Let’s say that vendor bill arrives in the mail. Is there a way it gets loaded to a digital platform? Can the finance team read it, code it and send it to the relevant parties? Can that party sign off on it, and can the CFO or other designated person process the payment for it? That’s what a remote system needs to be able to do,” says Klein. “If someone still needs to show up to the office and sign a check, that could be a problem.” It’s a matter of making sure the team has all the required information also has the capabilities to act on it.
“With that remote finance capability in place, the CFO and the rest of senior management can stay focused on developing better forecasts and more creative contingency plans for the company as a whole,” says Klein.
To help with that effort, Klein argues that the business should review its KPIs, and ensure the finance team can download the relevant data to calculate them. “If a company tracks the cost of customer acquisition, can the finance team deliver the numbers to calculate that? Is the data on Salesforce easy to pull out and apply to these metrics? Making that process efficient can speed strategic decisions,” says Klein.
Cash management with weekly check-ins
In crisis situations, conditions are always in flux. Customers that reliably pay on time may struggle to do so or even go under, suppliers can be late with delivery and billing, and a conservative revenue estimate suddenly seems like wishful thinking. This demands weekly meetings with that remote team so last week’s assumptions are vetted by this week’s reality. Did that client pay as planned? Is that vendor following up on an invoice earlier than usual?
“It’s all about cash management right now,” says Klein. “That requires a range of forecasts and contingency plans from best to worse case scenarios, with weekly updates to determine which forecast is coming true.” He points out that these updates can help the company stay proactive, so any cuts, layoffs or furloughs are done early enough that they can be minimized. “Nobody wants to wait too long and discover the only solution is a drastic one.”
Stress test the plan
Given that the crisis is already underway, most businesses won’t get a chance to test the readiness of their remote finance solutions substantially. But if possible, it would be good to vet the current mix of technology and processes, even if a company has to adapt along the way. “It’s not enough to have a single employee log on to their laptop, and test their access to that accounting system,” warns Klein. “At the very least, the company should have a small team work remotely to help troubleshoot any issues.”
For example, in testing their remote capabilities, Consero found that certain employees who lived in more rural areas lacked the broadband internet capabilities that their systems needed, and addressed that. They also found that employees worked better with their dual monitors, so they allow staff to take those monitors home when they work remotely.
“We want our team to be more than functional; we want them to be efficient,” says Klein. That robust testing allowed Consero to seamlessly shift to a fully remote capability as the current crisis began, so clients haven’t experienced a single hiccup in service so far. Going forward, Klein suggests that businesses vet their remote work plans annually, with small teams working that way for a week.
Even with the best planning and testing, there will still be challenges. Who could imagine a situation where everyone was working from home, and schools were closed, so an entire family would be draining a home’s broadband capacity? No one knows how this particular situation will evolve, but it’s never too early, or too late, to develop a rigorous plan to address the arrival of this very big black swan.
Consero provides a comprehensive Finance as a Service (FaaS) solution to private equity portfolio companies. We deliver experienced finance professionals, optimized accounting processes and scalable cloud-based systems to support your daily financial operations and strategic decision making. More than 80% of our clients are lower-middle market investor-backed private companies.
During COVID-19, Consero has transitioned over 700 employees to a fully remote environment. Currently, we are serving as the mission critical financial operations backbone for over 150 companies.