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Financial planning during lockdown - now is the time to put lessons learned from lockdown 1 into practice

With England now in its second lockdown, finance leaders in businesses across all industries find themselves in a similar position to March - but with one distinct advantage.

When we entered lockdown earlier this year, we were all gripped by uncertainty, no one working today has lived through anything like this, so from the day-to-day point of view of a finance team, it was all about reacting, re-forecasting, re-budgeting and stabilising cash flow in any way possible - while simultaneously setting-up remote working and learning to operate in a different way to usual.

Businesses as a whole were quick to react to the outbreak and introduce contingency plans, with almost 80 per cent of businesses in response to one survey claiming they had already put these plans in place before the end of March. Only each business will know themselves how effective those contingency plans have been.

Now with lessons learned, businesses go into this lockdown with experience which is vital to navigate through difficult trading periods and means finance teams are better equipped to understand what the financial data in lockdown is telling them and how to turn plans into action.

Accounting Project Management COVID-19

Posted 20/11/2020

Financial planning into practice

During the first lockdown there were essentially two main goals behind the finance team’s day-to-day: ensure money was coming in and going out, and planning and reporting. In the first instance when there wasn’t any real lockdown financial data to go off, finance teams had to really increase reporting, breaking it down into days and almost hours rather than weeks and months to be able to spot any trends as small as they might be and advise the business on opportunities to jump on.

As the days and weeks of lockdown went by, finance teams were able to use the financial data to create forecast models almost on the go. They would have also used the data to create new scenarios for the rest of the financial year and for in the event of a second lockdown, including U-shaped, V-shaped and L-shaped recoveries.

This means the team can more confidently inform the business, and present an overview of what the numbers might look like to influence and inform strategy. Now is the time that these plans come into play.

Of course there are still going to be some major differences to how the lockdown affects the business now than in Spring. First, we are heading towards Christmas, so naturally for many businesses their products and services will be in higher demand - especially businesses who have prioritised eCommerce and omnichannel buying experiences for customers as more consumers turn to online for the festive season. So the finance team will need to run the lockdown data against the projected income during the Christmas period to set an expectation of how the business will perform.

Operationally it’s highly likely your business will have adapted practices and processes in reaction to the pandemic. You may have invested significantly in your eCommerce platform and are now prioritising marketing, stock management and purchasing towards this model. You may have introduced new product lines or new services too.

So there will be distinct differences that will impact your forecast models - but it's up to finance teams to consider all these factors and provide the leadership team with as clear a picture as possible looking ahead.

Communication is key

Not that it always hasn’t been, but one lesson learned this year is the importance of communication. This isn’t just about good communication within the finance team and with the leadership team, but good communication is vital right across the business so that all departments are joined up in thinking.

This isn’t just possible through investment in your central ERP or other systems that make communication easier but also through culture. I think one thing the pandemic this year has done has instilled more of a communication culture across businesses, ironically at a time when most of us are split across multiple locations. Good communication helps feed into good financial strategy and planning.

It’s therefore also likely as we work our way through the second lockdown, that teams will be more used to working with the finance team and informing them on insights both quantifiable and anecdotal. This all helps the finance team with its ongoing planning and forecasting - harnessing the knowledge of the experts in the team as well as the data to make the right decisions about the shape of the road ahead.

Putting long-term plans in place

A second lockdown has placed a renewed focus on homeworking. However, going forwards businesses should not just associate remote working with a lockdown scenario – to some degree, it’s here to stay.

A recent report by the Institute of Directors found that 74 per cent of companies would be keeping increased homeworking post Covid-19. More than half of those surveyed said their organisation intended to reduce their long-term use of workplaces and over a fifth reported their usage would be significantly lower.

The recent, forced return to remote working will be a reminder that now is the time to ensure you have the technology to support your team in the long-term. Take stock and challenge yourself. Is your system scalable, does it support home-working and does it easily allow remote access to data as a potential permanent solution? These are all really important questions to be asking right now.

To find out more about The Access Group’s financial management software, visit our website.