Financial Actions to consider Post COVID-19 as the Economy Restarts
The pandemic has posed several challenges, and the companies that have gone digital are adapting to the crisis better than their peers. Now that the economy is opening up and businesses are resuming their operations, business leaders need to devise a proper lockdown exit strategy. There is an inherent need for companies to embrace the cultural and behavioral shifts introduced by COVID-19.
Business leaders today are rightly focused on the huge business continuity challenges posed by COVID-19. The preliminary task at hand for them is to ensure employees’ safety, securing financial sustainability, assessing the resilience of supply chains and reinforcing crucial systems to support unprecedented levels of remote working and online trading while withstanding an upsurge in cyberattacks.
However, businesses, no matter how digitalized, need to try and look beyond the immediate business continuity or liquidity issues caused by the pandemic. An understanding of the future business environment and the new normal is a must for the businesses to internalize and act upon.
Devise a lockdown exit strategy
Many countries are facing enormous drops in GDP. Hence, governments are thinking earnestly about lockdown withdrawal strategies that will allow them to restart their economies while curtailing the threat to human lives. Similarly, businesses will need to figure out how they restart their operations while continuing to prioritize the wellbeing of their staff and dealing with the aftermath of lockdown and its immediate implications.
Consider the changing role of the state
In its attempt to save lives, the government had implemented strict national rules, including lockdowns, which gravely affected people’s jobs and businesses. Organizations need to think about how new regulations may impact their business model and factor that into their strategy going forward.
With the dramatic fiscal intervention by the state in supporting impacted workers and businesses, it seems inevitable that we will see short-term nationalization in some industries as well as direct state intervention in newly designated industries of strategic importance. We should also prepare for changes to the taxation system as governments look to recoup some of their recent outlay and rebalance the books in the medium-term.
Use technology to augment, not replace people
The ongoing crisis has influenced businesses to reimagine how they would perform fundamental operations, leveraging technology. Organizations should rethink the way their employees collaborate with each other and customers - within the office, regionally and globally. By capitalizing on internal technology, organizations can teach employees how to efficiently leverage powered execution tools such as cloud-office technology and zero-touch models. This will help ensure that not only in times of crisis are teams better equipped to work remotely, but as the business environment continues to shift, employees can adapt alongside it and continue serving customers.
Embrace the cultural and behavioral shifts that COVID-19 introduced
For many organizations, the global pandemic exposed shortcomings of the existing systems and rendered many traditional strengths irrelevant. Technology has been the common denominator for most organizations’ resilience amid the crisis. This might mean developing omni-channel business models that combine the aspects of digital and face-to-face offerings.
The move to shift infrastructure from traditional data centres to the cloud, or a mix of on-premises and cloud computing, is already showing signs of acceleration. Many companies are already rethinking the ways to introduce further virtualization into multiple aspects of the business, such as learning and remote working, in turn imparting a significant impact on the real estate and carbon footprint of the business.
Enhancing liquidity and adjusting existing lending arrangements
Businesses must ensure that they create sufficient liquidity base to cater to their usual business operations, as well as to accommodate the urgent requirements arising due to the pandemic. The shift in requirements could call for existing resources to be channeled towards the essential spending on medical supplies and equipment required for evolved operations.
Supplier risk management
Real-time supplier data helps manage performance and issue resolution using tools like system performance category alerts and geopolitical events. When alerted, proactive measures need to be taken by organizations to uncover additional exposure levels to the threats by reaching out to suppliers in affected regions to identify the points of upstream supply dependencies in the supply chains. Additionally, organizations can reap benefits from balancing supply and demand. Also, collaborating better with internal stakeholders and the critical suppliers to contractually agree on logistic-based costs and necessary buffer stock, can help reduce sudden price increases in the face of a crisis.
End-to-end supply chain management
The already shifting landscape towards e-commerce calls for businesses to ensure that their internal supply chain’s capacities and delivery mechanisms are at par with the dynamic demands. This can be achieved with comprehensive end-to-end supply chain management, alongside advancing their ability to model and predict consumer behaviour, especially in times of uncertainty and disruption.
To conclude, the current crisis presents an opportunity to build profound relationships with critical suppliers, based upon the values of trust and transparency. Organizational resilience can then be built by reflecting upon the shared goals and motivations.