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The Covid-19 pandemic has left the world in a devastating rumble as the economy and the healthcare system take the blow. According to research, it is expected to continue going in this direction.
According to the Health System Financial Resilience Survey by McKinsey, both finance executives and CFOs of health systems show that there is a high chance of a dramatic impact on cash flow and operating margin.
Furthermore, 30% of respondents were expecting to see their 2020 operating margin to be below 20%, while 15% are not sure that they will have enough cash throughout this crisis.
However, regardless of this impact that’s expected to take place, the finance executives and CFOs claim that right now they are working on taking only a few measures in order to tackle these expected financial challenges.
Almost more than a decade later and after the Great Recession, this pandemic has dramatically increased the stress of executives within the global economy as they worry about another potential recession. Through social distancing practices in order to slow down the spread of the virus, the economic activity all over the world shortened greatly.
Moreover, it is quite clear and obvious that a global recession took place towards the first few months of 2020, and there are chances that this could continue for a long period of time.
Recessions and downturns could turn out to be a potential challenge, and a lot of the time certain businesses aren’t able to make it out alive. Moreover, this virus seems to be spreading every day as new variants are seen coming out.
Therefore, this might require CFOs to utilize new tools. For example, they should focus on scenario-based forecasting and virtualization, in addition to the standard methods they have used in order to act reasonably and swiftly.
During these hard times where the economy is going through the highs and lows of uncertainty, CFOs should focus on six important factors that can greatly help protect their companies and their workforces.
1. Get Ready For Talent Disruption And Also Virtualize Your Organization
CFOs can offer resources for their talent and clearly explain how everyone should support each other. Moreover, virtualizing their finance function, including other areas of their organization, it will help them effectively operate in the world of social distancing.
2. Strengthen Liquidity
This can be done by managing and handling short-term cash, credit, and performance needs.
3. Have An Effective Means Of Communication
Stay in touch with the critical stakeholders and keep them informed regarding areas that matter. Communicating with them on a regular basis will greatly help.
4. Drive Operational Improvements
This is important as it will help in navigating the sharp downturn.
5. Learn To Manage The Risks
Swiftly and carefully manage potential risks and serve as the stewards of company assets throughout this difficult time.
6. Have A Recovery Plan Ready For After The Crisis Is Over
Make sure to have a plan ready once all this is over. This can happen by tactically positioning and utilizing assets.