Financial forecasting in the time of COVID is crucial for business continuity. Find out how CCH Tagetik can help make financial forecasts intelligent.
The COVID-19 pandemic has devastated many of the world’s economies. While nations are now slowly rebuilding, the long-term impact remains unquantifiable at this point.
This level of uncertainty is drastically accelerating the future of finance management. Changes towards automation and other forms of tech-driven efficiency have shifted from attractive prospects to necessities.
Understandably, cash flow is one of the primary concerns as business survival and continuity rest largely on this. This is why companies, led by CFOs, must take swift actions such as Financial Forecasting in order to bring resilience to a company’s financial health during and post-pandemic.
Why You Need Financial Forecasting More Than Ever
One of the key reasons why a cash flow forecast is imperative is that it will support enterprises in making appropriate long-term financial decisions. The information that a projection yields provides the needed perspective to make impactful decisions to not only survive instability, but to thrive despite it.
Apart from this, financial projections benefit enterprises in several other ways:
- In gauging whether you need more funds to support your business: the disruption caused by COVID-19 can lead to lost revenue and incur more costs in adapting to the new normal. A timely forecast provides a clear idea on whether or not you will require to pull funds for continuity.
- In determining whether you need to pivot your business strategy: forecasts can yield valuable insight into mapping out new strategies that your business will need to survive. These insights will be crucial to help you move forward and will decide if your company’s current strategy is future-proof.
- In testing the impact of various business moves: this could be business decisions such as letting go of employees, determining if a loan is required and how to handle repayments, and so on. Forecasts will provide you with the opportunity to compare the foreseeable results of possibly drastic decisions before their effects impact the company. This will allow you to make correct decisions and avoid missteps.
- In seeing the profitability of the company in six months and one year: by projecting forward to these points, you can further refine your strategy and make key decisions towards an upward trend. In the context of the pandemic, making these projections is even more critical for detailing scenarios wherein a vaccine becomes available or other shifts in the development of the pandemic that will potentially impact your organization.
- In mitigating any shortfall: a forecast provides knowledge that will allow your company to stay afloat if worse comes to worst. If shortfall cannot be avoided, seeing it coming as early as possible gives you the most time to act.
A rolling forecast in the time of COVID must be done more critically, but with more flexibility due to a lot of uncertain factors at hand. The key is to make these forecasts intelligent.
4 Ways to Make the Forecasting Intelligent
In order to fully maximize the benefits of forecasting in financial planning and budgeting, it has to be grounded on intelligent insight. Here are four ways to achieve that goal:
1. Assess the impact of the pandemic and how it correlates to your business
Due to the global scope of the pandemic and the rippling effect it has on economies and almost every other sector, it is imperative to put your rolling forecast in its context. Will government measures to contain the spread of disease affect operations? What changes should you enact to protect your own personnel and clients? COVID will need to be taken into consideration in all points of contact with your customers. All of this planning needs to be translated to efforts as soon as possible, and almost all of it will incur costs. Factoring the impact of COVID can only steer you away from fiscal and budgetary pitfalls.
2. Use underlying internal and external data ahead of the curve
Forecasts are proactive by nature, and analyses must be able to look past emergent trends. Apply the data available to you to anticipate trends so you can leverage them to your advantage.
3. Evaluate supply chain/manufacturing and impacts on inventory and COGS
Take a good look at your operations to identify bottlenecks or opportunities for streamlining. The pandemic might be causing hurdles for you to navigate, and identifying them allows you to maneuver more freely.
4. Leverage forecast scenarios to quickly react if and when the next wave of the COVID impacts specific countries
The threat of COVID is still not stamped out, and it is crucial for your business’s survival to anticipate waves of infection and prepare accordingly. Mapping out multiple wave scenarios allows you to foresee decision points so you can take the stronger course each time. What fiscal contingencies have you planned out in the event of succeeding waves of infection occurring within your business’s area of operations?
How CCH Tagetik Can Help in Times of a Crisis
Utilizing an intelligent Budgeting, Planning, & Forecasting platform will streamline the process so that your forecasting will have more impact.
CCH Tagetik’s Financial Planning software unifies all plans, processes, and data so you have a single source of truth. The software combines operational data and financial data so you know how one financial decision will affect your operations.
All in all, it’s a reliable software that can help companies become agile, get deeper insights, predict and prepare for the future better.
COVID has caused quite an upheaval, and businesses as we know it will continue to face the aftershocks until a permanent solution is found in the form of a vaccine or some similar development.
Because there is much about the pandemic that is out of your control, forecasting is integral for crunching the known factors so you can navigate toward stability.
Employ the adequate tools to produce the most accurate rolling forecasts possible. Only then will you be able to distil your data into insights that yield positive results.
Learn more about CCH Tagetik’s Budgeting Planning & Forecasting software.