...The "curve" continues to flatten.
...Economies are starting to re-open.
...Employees are gradually returning to the office.
These are hopeful signs that the worst of COVID-19 may be behind us.
But the question that finance leaders must now ask themselves is:
“Is my finance department prepared for a second wave of COVID-19?”
The operational impact of COVID-19 has been unprecedented. At the height of the pandemic, most of the country was locked down. Employees were sent home. Offices were shuttered. Business travel was stopped. And organizations transitioned to new modes of working. All within days.
COVID-19 has been unlike any other event in modern history. But it is not the first event to disrupt finance operations. And it is unlikely to be the last. Within the past few decades, terrorist attacks and natural disasters have significantly impacted the financial operations of major organizations.
That is why it is so surprising that so many organizations are unprepared for a disaster.
Prior to COVID-19, 49 percent of organizations did not have a business continuity plan in place, or experience running an emergency preparedness scenario, AFP’s FP&A COVID-19 Survey found.
Incredibly, 65 percent of the organizations that were unprepared for an emergency describe their response to the COVID-19 pandemic as “effective” or “highly effective.” There is no telling how much of those high ratings can be attributed to the relief of successfully transitioning to new ways of working. Or how many of these organizations use cloud-based solutions that facilitate Work from Home arrangements or on-premise systems that can be accessed remotely through a virtual private network (VPN). Or how finance leaders will rate themselves if they experience a spike in fraud and compliance issues because of the “makeshift” processes they implemented during the crisis.
But there is no question that these organizations may not be so lucky the next time disaster strikes.
Consider that organizations with a disaster plan in place prior to COVID-19 are much more likely to describe their response to the crisis as “effective” or “highly effective” than those without a plan. What is more, AFP’s research suggests that it took organizations without an emergency preparedness plan much longer than their peers to settle into an operational rhythm, and their staff had to work longer hours. In other words, a lack of disaster planning is a major competitive disadvantage.
Some finance departments are still operating in a reactionary mode. Others are indiscriminately cutting costs and putting the brakes on automation without regard to the long-term repercussions. The cost cutting is putting more pressure on the remaining AP resources to keep the operation running.
But many organizations know that they have work to do to prepare their finance operation for a potential “second wave” of COVID-19 or other disruption. Only 58 percent of organizations surveyed by AFP believe that their finance and accounting team has the operating structure that they need. Thirty four percent of organizations admit that their processes are not flexible enough.
Thirty-four percent of organizations say their staff does not have the analytical tools they need during a crisis, per AFP’s research. Many organizations rely on spreadsheets for operational and financial reporting. Spreadsheets are hard to manipulate, take a long time to create, and quickly become out-of-date. Navigating a crisis requires finance leaders to have unified, real-time view into data.
Key components of a business continuity plan
Now is the time for organizations to prepare their finance operations for the next crisis. Look for a technology and service partner that has a formal plan in place – and structured protocols for testing the plan – to ensure the continuity of their systems and services.
Critical components of a business continuity plan include:
- Identification of risks and exposures
- Assessment of various business disruption scenarios
- Determination of the most likely threat scenarios
- Technology recovery options
- Communication plans (employees and customers)
- Critical business processes and workflows
- Critical staff and backup options
- Internal and external dependencies
- Emergency preparedness testing plan
- Periodic plan reviews
- Periodic Business Impact Assessments
Investigate the track record of a prospective technology and service provider in supporting organizations during a crisis. Ask the technology and service provider’s customers about their performance during a crisis. Many technology and service providers were able to support their customers without interruption during COVID-19.
And look for technology and service providers that leverage a 100 percent native cloud-based platform for essential business applications such as accounts payable processing. Make sure your technology and service provider has an end-to-end solution that does not require you to fill in the gaps that are critical to processing invoices and making payments to vendors. Cloud-based technology facilitates Work from Home arrangements in a secure, scalable environment with complete transparency.
Finance leaders cannot anticipate when or how their operations will be disrupted. But they can plan for it. And choosing the right technology and service provider can ensure that your organization is ready.