CFO Risk Mitigation Checklist For Maintaining Seamless Cash Flow

14 December 2021

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The COVID-19 pandemic has profoundly impacted businesses, causing drastic disruption across business aspects from revenue, growth, liquidity to supply chain, and beyond. Today, it has become crucial for CFOs to move from short-term survival mode to long-term planning for optimum risk mitigation, thereby maintaining seamless cash flow while ensuring a quick and stable business recovery. And with its onset, the need for CFOs to embrace newer strategies to reduce COVID-19’s impact both virtually and sometimes without the staff and resources have become essential. 

How Can CFO’s Mitigate Risk While Maintaining Seamless Cash Flow? 

As companies worldwide continue to navigate amidst a health catastrophe turned into a recession, CFOs must reiterate their short-term survival strategies and settle into this new phase to address critical business areas. Here’s the checklist of the CFO’s risk mitigation strategy for maintaining seamless cash flow:

Flexibility & Adaptability Will Be The Key To Survival: 

When the pandemic struck during early 2020, the immediate course of action many businesses took was to address short-term needs by focusing on surviving – a critical move but not a sustainable one in the long term. Amidst such a situation, to ensure long term stability, agility and flexibility will be essential for planning to mitigate these changes.

Further, it is essential to understand that challenges will continue to disrupt the overall long-term plans. Therefore, CFOs must ensure enough liquidity to prepare for the disruptive scenarios to adapt strategically and with agility.

Keep A Tab On Supply Chain Vulnerabilities & Collections:  

It is understandable that, like many businesses, customers and suppliers are undergoing financial challenges and uncertainty. Analyzing customer receivables, managing collections, and having clear communication with suppliers and vendors will be essential to avoid any supply chain disruption:

  • It’s essential to create a methodology for modelling customer requirements and the production, fulfilment, and delivery scenarios that follow. This will allow CFOs to prepare for the impact on the production schedule and devise a plan accordingly.

  • Having clear communications with suppliers will ensure access to the raw materials or services to fulfil responsibilities. It is to be noted that vulnerable suppliers can put businesses at risk, and a CFO must be prepared to find an alternative source of supply.

  • Additionally, assessing billing and cash collections will enable CFOs to respond proactively to any delay requests.

Embracing Digital Transformation To Navigate The New Norms

The advancement in digital technology has given unique challenges for the CFO to embrace and accommodate newer technology for an enhanced business result. The pandemic has split up the rule book, compelling organizations to evaluate their working patterns, resulting in businesses becoming digitally more equipped and prepared for the future to harness the key-value and importance of technology moving forward.

Redirect Resources For Real-time Risk Management

Functioning in a high-risk environment requires capable leadership and the ability to mitigate overwhelming gaps in planning and security. Hence, it is essential to understand that the internal systems are positioned to prevent system failures. It is to be noted that any weak points can leave the system vulnerable to fraud or costly oversights, resulting in significant setbacks.

The Bottomline: 

Developing a policy for operating in this critical period may appear daunting, but the most fundamental element in establishing a structured plan and closely managing its execution. The old methods of conducting business are gone. Therefore, CFOs must rethink and reanalyze how business functions, both operationally and financially. Swift decisions based on accurate planning will be crucial to secure a more robust business prospect.