VIEW OF COVID-19 FROM THE CFO PERSPECTIVE
The return of increased business activity in several countries around the world in the midst of the COVID-19 pandemic reveals that companies are facing a new scenario.
What are the most important concerns for companies now? What elements are they focusing their strategies on? What are their market projections for the coming months?
The impact of the global economic recession and the threat of a new wave of coronavirus infections are the two most important global concerns for companies, according to a survey made by the global consulting firm PwC to 989 Chief Financial Officers (CFOs) in 23 countries.
This business survey conducted between June 1 and June 8 includes a series of reflections that are essential for importing and exporting companies to design their action plans for the rest of this year 2020.
At Credit Report we summarize it as follows:
Global economic recession:
Regardless of the differences between countries due to the stages of the COVID-19 pandemic and the fiscal stimulus measures taken by each government, all markets will be affected by a global economic recession.
The World Bank projects this to be the most pronounced global economic downturn since World War II.
Not surprisingly, 60% of CFOs surveyed agreed that the impacts of this economic downturn are their greatest concern.
The design of new financial plans to navigate these recessionary scenarios is a central element for all companies, especially those focused on international trade, with companies located in countries severely affected by the COVID-19.
Reinventing products and services
More than half (53%) of the CFOs surveyed by PwC project that they will face a drop in earnings, which may be as much as 25% less than the previous year.
COVID-19’s complex financial situation demands that companies, regardless of their size, their base countries, or their economic sector, start redesigning their business plans and readjusting their products or services to the needs of today’s market. This step can help them reduce the impact of lost profits and, especially, maintain good cash flow in the months ahead.
New employment schemes
When looking at the map of COVID-19 infections, it is clear that Europe and Latin America are going through very different stages of the pandemic. However, it is clear that all countries have to assume the new coronavirus as a permanent threat until the first vaccine appears in the picture.
This forces companies to prepare to maintain work schemes that can combine a new organization at headquarters and the remote work schemes implemented in the days of complete confinement.
In fact, 52% of CFOs surveyed by PwC said their companies will focus on improving the remote working experience as one of their short-term goals.
Reduced consumer confidence
The social containment measures had an immediate effect on consumption levels, but also on consumers’ perspectives on what they are looking for, what they want and what they are willing to pay for now.
31% of the CFOs surveyed said that declining consumer confidence is a problem that needs to be addressed in the short term to ensure the recovery of capital flow and corporate profits.
So both importing and exporting companies need to work on alternative ways to build loyalty among their traditional customers and establish partnerships to strengthen consumer confidence where possible.
Despite the unprecedented conditions of the pandemic, CFOs left all concerns regarding supply chain disruptions (17%) and rising business costs (16%) at the bottom.
This detailed survey conducted by PwC reveals that now is the best time to fine-tune some financial strategies and create new business strategies to maintain profits even in a scenario as complex as this COVID-19 pandemic.
At Credit Report, we can help you increase cash flow, achieve greater profitability, and thoroughly evaluate new clients, three tasks that are now more important than ever.