How a VCFO Can Help You Handle Financial Issues Caused by the Pandemic
We are currently living through one of the worst economic crises in the past century, with many companies already losing more than 75% of their yearly profits within the first quarter of 2020. Some are laying staff off while others are trying to cope by cutting costs and encouraging their employees to work from the safety of their homes.
Amidst the chaos there is one thing that is certain – the role of VCFOs is crucial to companies more than ever right now. COVID-19’s greatest crisis is the asset liquidity and financial stress that has come out of it.
Our trustworthy McAllen VCFO at Abigail Y. Murray CPA, LLC, will help you understand how a VCFO can play an active role in managing and stimulating the finances of your company.
Assess and Plan Given the Current Financial Circumstances
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- VCFOs come up with the first line of defense. A VCFO’s initial responsibility is to figure out and predict the cash collections of the company’s latest sales. The next duty regards collecting payments from defaulting customers. If the working capital is still insufficient, the VCFOs have to look at other methods to raise capital, including tapping available lines of credit. However, the VCFO can also use a range of tools (e.g. spend control tower) to prioritize pending payments and establish reporting metrics to track real-time liquidity.
- Make a game plan for different scenarios. The virus impact can have a plethora of scenarios. The VCFO determines which path the impact of COVID-19 pandemic can take – which geographies may be more affected than others and which industries may suffer the worst hit. The VCFO can implement a task force in efforts to deliver applicable information which guides the business decisions or monitors the finances or factors that directly/indirectly influence the finances of the industry.
- Arrange communication plans. During a hardship, it is imperative for your company to communicate concisely and proactively with its investors and boards of directors. The first couple of months are most essential to perfect the frequency and transparency of communication and that is where a VCFO can also step in.
Planning for Normalcy
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- Enhancing productivity. Once the VCFO handles your cash preservation concerns, their next focus would be to focus on any improvements of near-term performances. At this point, the VCFO decides whether or not to shift production to new products and services that help customers in need. That would improve your company’s quarterly returns. A prime example involves a handful of companies using alternative sales and delivery channels like e-commerce.
- Reassess the company investments. Decreasing inventory, refinancing outstanding credit, accounts receivable and payable are all aspects of the balance sheet that require deep diagnostics by a VCFO. A VCFOs goal is to enforce and guide the R&D, capital allocations, and IT to revamp the organization’s investment portfolio.
- Focus on financial planning and analysis. The start of a financial crisis is the appropriate time for a VCFO’s financial planning and analytics to review the company budget and forecast. A VCFO would help monitor KPIs and run them to offer data to the decision-making authorities.
Being Successful for When Things Are Normal Again
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- Be ready for transformation. A VCFO wants your company to thrive in the after-effects of an economic crisis. They can help you prepare for a transformation mindset.
- The VCFO can review your company’s investment portfolio again and focus on every business unit’s achievement.
- Considering if divestitures can enhance the company portfolio. VCFOs can see if divestitures would improve your company’s returns in the immediate quarter. The crumbling economy can lead to numerous opportunities for mergers and acquisitions by companies seeing profit even throughout the crisis. A systematic approach to M&A may boost a company’s investment in the long period of rebuilding.
- Adapt to the digital world. The pandemic is the first disruption that has made remote working more popular and productive for a multitude of companies. Now is the time for most companies to keep that practice alive even after the crisis is over. VCFOs can help you look into the outcome of a digital workforce on the company finances long after the COVID-19 situation is over. A VCFO can assist you in increasing the financial forecasts and collaborative dashboards to your whole company and its subsidiaries, which can be instrumental for informed decision-making and reporting.
This McAllen Virtual CFO Ready to Help
In these trying times, when employees or their loved ones might be struggling with health problems, anxiety, or financial woes, our McAllen VCFO is here for you. When you consult with Abigail Y. Murray CPA, LLC, we can help you come to solutions despite the financial insecurity companies are going through.