CFOs, a function undergoing major changes and now having to face up to the crisis
Digitalisation is an important success factor in crisis management. Companies that had already digitalized certain HR functions such as pay slips or the signing of employment contracts are now at an advantage and the gap is widening between them and those for whom digitalization was less developed. Many of them are starting to set up deadlines for their requests for deferral of charges and are entering into discussions with banks to obtain financing.
Some industries, notably the automotive sector, are forecasting a gradual recovery that would not occur before September in the most optimistic hypothesis, or even not before 2021. The crisis will have a negative impact on companies’ operating accounts. However, companies should be able to hold on thanks to the tools put in place to give them access to liquidity.
With a view to optimizing cashflow, businesses that have taken out tax credits and close their accounts on March 31 can also immediately deposit the repayment of the credits. However, as the cost of financing the State-guaranteed loan (PGE) is not yet known, it will be in the interest of the firms to ensure that the banking sector, irrespective of the fact that it cannot ask for an additional guarantee on this type of credit which is already 90 % guaranteed, does not take advantage of the situation when the time comes.
The dividend increase has also been discussed with the banking pools as it is used for the payment of the EMP. The choice of some companies to defer it to the following year was understood by the shareholders.
The subject of rentals is proving to be just as delicate. Some companies renegotiate their real estate loans with the banks and make requests for six-month deferrals, which are largely accepted. They also freeze their next acquisitions. One of the main difficulties in this area is that the entities from which the companies request rent deferrals are themselves in difficult situations.
In addition to the health context, the recovery will be complicated by the protective measures that companies are putting in place to protect themselves. The success of the recovery will depend primarily on their ability to obtain confirmed orders from customers who are able to take them, as well as to ensure a reasonably productive level of activity.
From Business Partner to Business Maker?
The crisis has thrown many employees into an unusual teleworking situation that they did not necessarily want. The role of management partners is therefore essential to enable the company to deal with individuals who do not always know how to manage teleworking or business downturns. These partners play a role of support, transparency and ongoing clarification.
In order to continue to manage and protect the company, it is necessary to be a true team leader and to be creative.
How can the role of the CFO in the transformation of the company be ensured and developed?
As activities are fixed on their operational side, the first objective is to secure the short term by obtaining liquidity and establishing estimates based on several recovery scenarios. Companies will thus have to ensure that neither they nor their customers will encounter payment difficulties, but they will also have to ensure that they can meet demand even if they are not operating at maximum capacity.
Finally, they will have to ensure that social distancing measures are respected to avoid jeopardizing their production cycle and the health of their employees. Some of them already offer employees the opportunity to return to work on site on a voluntary basis.
Even if they are busy managing the crisis and preparing for the aftermath, companies must not relax their vigilance on other issues, as some individuals are taking advantage of the disorder generated by the health situation to increase fraud attempts and cyber attacks are on the increase.