The past year pushed even the most resilient companies to reflect on their near-term strategies. As lockdowns prompted an immediate shift to remote work, a need to adapt and maintain continuity emerged worldwide. Yet with all these challenges, CFOs and finance leaders found some silver linings.
In a recent recording of Emburse on the mic, we sat down with two CFOs to hear how they adapted to uncertainty and where they’re focusing this year.
‘Navigating an uncertain future’ was the single biggest challenge according to a recent survey of CFOs and finance leaders.
Shifts in cash management
According to a recent study conducted by Financial Director, 80% of CFOs said the pandemic negatively impacted their organization. Only 14% believed they’d recover the lost revenue within six months. The sheer complexity and scale of the pandemic caused cash flow concerns in every sector, even those that weren’t heavily impacted by Covid.
“The pandemic really shifted our priorities to focus more on cash management, spend visibility and also spend control,” shared Katherine Edenbach, CFO at Emburse. “We started to see companies conserve cash because of the economic uncertainty.”
She wasn’t alone in this sentiment. According to a study with ICAS, ‘navigating an uncertain future’ was the single biggest challenge expressed by CFOs and finance leaders. “Having as many customers as possible pay electronically helped us to make those inflows much more predictable,” said Edenbach. “Using an AP or invoice automation tool to ensure that finance has visibility to invoices in a timely manner.”
When WFH wasn’t an option
The travel, tourism, manufacturing, and retail sectors felt the most significant impact, since these industries almost entirely depend on in-person contact. Yet economic policies created favorable settings for some consumers. Dropping interest rates and stimulus freed up excess cash, which prompted some to reduce their debts or park cash in savings and other investments. These actions placed some organizations in a favorable cash position.
Carrie Foster, CFO at Frontwave Credit Union, shares her unique challenges, ”Being a credit union, a lot of our cash flow comes from our members depositing money into their accounts. Many members were holding onto their money, and we had an abundance of unexpected cash, but we weren’t earning money on it.”
The policies prompted a dichotomy of experience as specific sectors that could work remotely felt less disruption. Foster added, “We had many members paying off or refinancing their loans which brought in an extra layer of cash. We had to make sure that we were investing appropriately, but we weren't comfortable investing all of it because of the economic uncertainty.”
Making the necessary changes
“2020 derailed every plan that we had for the credit union, shares Foster. “We started planning scenarios to try to think of everything that could go wrong. The quickest strategy was cutting back expenses and only focusing on things that needed to be done in the current environment.”
Many organizations around the world reacted similarly. Reduced income, remote employees, and reduced operations were the three biggest pains, according to CFOs.
“We canceled a lot of facilities improvements. We canceled all travel. And we started stocking up on PCs and other equipment so that we could have our employees work remotely,” said Foster.
Data from our SpendSmart report showed this trend. Monitors. Software subscriptions. Office furniture. The most basic office items increased in expense volume as every organization strived to equip its workforce.
A shot at data-based recovery
As vaccines roll out, CFOs are now charting a course forward while the economy rebounds.
“We plan to use our analytics tools to drive more visibility into spending patterns and help us identify areas for improvement,” said Edenbach. “In addition, we're seeing our employees ask about a return to business travel. So both employee safety and cost controls over travel spending will increase in priority.”
Frontwave Credit Union echoed Edenbach’s sentiments.“We decided to switch to your accounts payable solution during 2020 because of all the reporting capabilities and efficiencies it provided,” said Foster.
“ACH payments let our employees continue working from home, and we can find efficiency,” shared Foster. “That way, our staff can start doing more value-added things like analytics and the reporting capabilities that the AP solution is going to offer us.”
To hear the entire conversation with Katherine Edenbach and Carrie Foster, head over to our podcast page.