Last week, an interesting webinar from the Topics of Scale series was put ahead in the digital world by two of Scalefocus' specialists - Vasil Rabuhchiev and Dafar Shaban. After Krasimir Kostadinov talked about how software companies can make sure they have a successful transition and work productively at home in the webinar "All Software Is Homemade Now", we now turned the audience's attention to finance.
This hot issue in today's business world was covered with the topic "Crisis Offensive: A Strategic Finance Perspective." Below you can hear and watch the whole webinar, or keep reading to see the main points in the recap.
Resolving the Immediate Crisis
From the perspective of the current crisis, a lot of organizations were surprised by the conditions they found themselves in. Vasil pointed out in the beginning that everybody started talking about the quick response, but even more important could turn out to be "the finance and strategy functions of a business organization that could address the realities of the current economic halt." He also stressed that there might turn out to be a positive aspect of the crisis whereby the realities of today make organizations think proactively about how to address the future and jumpstart a more positive development in the post-pandemic world.
"At first, everyone set to think about solving the immediate crisis first, surviving", says Vasil.
"But we believe in result-oriented solutions because we know that everything organizations currently do needs to be results and objective-oriented rather than a continuation of business as usual in effect.
To reimagine reform and prepare for a different reality is the most important thing and it has to do with finance, strategy, and technology." All those could push the companies forward and help them now but also in the future.
"Just to put the current situation in perspective," says Vasko, "some people mention the crisis from 1997 or that at the beginning of the 80s, but none of them had the scale, severity, and speed of what we are facing at the moment."
He mentions that before the pandemic, everyone was expecting global GDP growth of about 2-2.5%, but "now everyone is expecting a global contraction of at least 2%" Dafar and Vasil shared interesting graphics illustrating this point in the webinar. (see recording).
And what the realizations should be right now? "I personally think that if any business doesn't think this is a long-term shock or they are not thinking that this crisis is going to affect them, they are being delusional", says Vasil. Dafar and Vasil mentioned that what stumbles businesses is the interdependency of all supply chains - a huge issue.
"Humanitarian and health perspectives are huge, but the biggest problem is the interconnection between the businesses that are now contracting. That is the essence of this crisis."
Focus Points To Success
Vasko and Dafar admit that the focus points to financial success in the crisis they are giving in the presentation are "unconventional to a degree." One of them is cash generation and capital management. "In normal business circumstances, businesses are concerned with levels of profitability and earning.
Now, this has been turned upside down. Now it's all about cash." But following all cashflow, they say, is crucial. Vasko says "I think a lot of businesses are underestimating the importance of cash generation.
The importance of having a real-time view of cashflows is great. It shouldn't be monthly, or weekly, but daily, for most businesses.
Vasil gave an interesting perspective and scenarios of what should be prioritized in this situation in the recording. Another focus point should be prioritizing payments and imposing clear reporting metrics tracking liquidity in real-time and another one - to do the so-called scenario building.
"Without the resetting of agendas and prioritizing, your business might survive, but it will not thrive", says Dafar.
Finally, they explained why it's vital to have a communication plan and communicate proactively and confidently with stakeholders of the business. "That could be shareholders, loan holders, other parties, and it's hugely important and makes everything more open. If you capsulate, and build barriers, people will think something is wrong." The deepening of partnerships in times of crisis can give a lot of loyalty in the long run.
As for keeping real-time track of the finance - that could be a mix of things like dynamic dashboards, analytics tools, more regular reporting, more broad reporting, etc. "This gives a better understanding, and it's quite powerful. In these circumstances, you could see things that you normally wouldn't".
Technology Does Not Mean CAPEX
Vasil says that nowadays, technology doesn't mean capital expenditure. Dafar adds that in the past 3-4 years there is a huge spike in cloud-based or SAP projects. "Before it was something the big businesses needed and afforded, but that is no longer the case." This type of system, Vasil, and Dafar say, "give you the truth about the state of things". The important thing is to allow your business to rely on enterprise resource planning, the so-called golden record of truth, and insightful data visualization, because "the relevance of the information is crucial" and "the bigger picture is in the small details".
Vasko says that the goals of thriving along this crisis are connected to a lot of things but mostly preparing for the next steps. "Some of it has to do with ethics and leadership and something we decided to call the hard currency of the business".
Seeing for example, that "the current crisis is in a way an ethical challenge for leadership, organizations, at large. And goodwill is something that you build, it doesn't happen overnight."
"If you put yourself as an organization that easily trades with its hard currency now, just to get some short-term stability or success, that is harder for your long-term success."
Vasil and Dafar say that everyone in the organization needs to be working towards a measurable and realistic objective. How to achieve that? A lot of tools can help, but the point again is on value creation. What else is keeping businesses afloat as a strategy - you can hear in the recording.
Almost All Commerce is eCommerce
Building eCommerce is a competing field right now and more and more clear that it's a great way of building brand identity and creating financial stability in the future. Dafar talked a lot here about relevance and how building not just eCommerce, but a good platform that will bring success to the business after the crisis "when everybody will be used to shopping online." In the recording, he gives several examples from live projects with real clients of Scalefocus about building a sustainable eCommerce platform and the value it brings.
Customer relevance is another thing both speakers focused on, at the same time putting emphasis on being "interesting" - the idea is not to give repetitive solutions, but to be more disruptive and innovative here.
Prepare and Invest for Better Times
When thinking about the future, there needs to be a clear understanding of where your business stands financially. Dafar and Vasil say that technical due-diligence is becoming increasingly important and give several examples as to why. Another point Dafar makes is the automation of finance as a way to keep track, be more proactive, and stay on the loop in situations like these - because unpredictable moments bring out the innovative mind.
Usage of technology and concrete measures to put to use with investment and thinking ahead are vital - and in the webinar, the examples show the truth of that very clearly.