Finance team reviews key lessons learned from COVID-19 to support future response

1 Year Later: Lessons Learned from COVID-19 for Finance

Finance relies heavily on the utilization of forecasts and estimates to inform present and future decision-making. The introduction of COVID-19 one year ago completely disrupted any and all plans, schedules, or predictions. With the world greatly affected by uncertainty, finance leaders were forced to develop long-term models that were adaptive and flexible to short-term changes.


A year later, finance leaders can reflect on key learned lessons and understand how best to navigate these unpredictable times with informed, flexible, and resilient solutions. Namely, through the power of the OneStream™ XF SmartCPM™ platform that supports financial and operational planning and forecasting to maximize agility.


What Did Finance Leaders Learn During COVID-19?

The abrupt halt to regular existence in March 2020 caused many predictions and forecasts to be scrapped or re-worked. While this was extremely challenging in the moment, it was also uniquely valuable because of how much was learned. Consider these key lessons learned for Finance, which should influence how you approach Finance in 2021 and beyond.


1. Plan for Uncertainty

While financial leaders are adept at accounting for uncertainty in their forecasts, none of the traditional risk calculations could, by themselves, capture the variability and volatility of activity brought on by COVID-19. For this reason, finance teams had to quickly learn how to create financial strategies that didn’t just prepare for unexpected events but planned for them as well. But how could Finance leaders develop such a plan?


In the spring of last year, McKinsey & Company suggested a new approach for financial planning that facilitated both rapid realignment in the case of emergency as well as the preservation of organizational resilience.


The recommended approach emphasized the idea of aligning the organization around a common direction or goal. Unifying your company through cross-departmental communication is always an excellent idea for firms looking to achieve and implement a financial strategy. During COVID-19, this type of collaboration proved to be essential.


One way that many organizations approached their post-pandemic forecasting was to create a COVID-19 financial planning team. These interdisciplinary teams took the perspectives of multiple departments, branches, and leaders and created one cohesive approach.


Even if the forecasts did not pan out, these teams were still prepared to quickly and effectively respond to any dramatic shift in environment or business. But, the goal wasn’t just to prepare for failure; it was to plan for success. In bringing these decision-makers together, businesses were more capable of creating accurate forecasts through range-based planning.


2. Achieve Accuracy Through Scenario Planning

Probability has always been a major component of financial planning. From building renovations to business acquisitions, probabilistic analysis is an excellent way to determine the average return on investment (ROI) of a particular project. The only way to be able to leverage the benefits of such techniques is to expand it to a wider range of scenarios.


Most organizations construct their plans using target scenarios from their different business units. These identify the best-case scenario, most-likely scenario, and so forth. Prior to the coronavirus outbreak, many Finance teams used the most likely scenario to create a single set of financial results.


Now, given the current state of the world and the economy, it may be beneficial to instead develop a range of results based on the list of possible outcomes. Similarly, in preparing a range-based plan for multiple scenarios, organizations should pay close attention to the worst-case scenarios.


Considering how unpredictable everything still is one year later, the bottom projection could be a great bar to utilize as you work to reconfigure executive-level expectations. This ties into one of the most important financial lessons from 2020, which is how you measure success.


3. Update Financial Reporting Through a Pandemic Lens

Success is a difficult figure to measure in the context of a recession and a global health crisis, especially when many organizations have earned lower revenues than in previous periods.


However, according to a recent OneStream survey, 47% of surveyed companies are still using sales or revenues as indicators of their financial recovery. While this certainly is one of the indicators of success and recovery, other KPIs (Key Performance Indicators) should be used to measure financial results and the rate of recovery.


This is because some industries have continued to yield negative shareholder returns over the course of the past year due to industry-specific challenges. If your industry has been significantly impacted by the disruption, then consider utilizing other KPIs to capture a more accurate picture of current financial performance.


Contact HollandParker for Support

Trying to both learn from the pandemic while also continuing to operate during a fluid recovery period can be an arduous process for Finance teams. Fortunately, OneStream XF makes it easy to achieve the necessary flexibility and agility to adapt in real-time.


As a Diamond OneStream Implementation partner, we can help your organization realize the most benefit from utilizing OneStream to navigate changes in Finance. Through our industry-leading capabilities, we empower Finance teams to utilize the OneStream tools to achieve key objectives such as unifying planning and forecasting with financial reporting.


Talk to us today about helping your organization migrate to the industry-leading CPM solution on the market. We will work with your Finance team to quickly and easily align with business changes brought on by the pandemic.