Editors Note: Content contributor and NHADEC member Barbara Raths is a Senior Vice President and Treasury Management Sales Advisor and International Treasury Specialist at Camden National Bank.
Resilient financial operations: Preparing for recovery
By Barbara Raths, SVP, Treasury Management Sales Advisor
According to the Center for Disease Control (CDC), communities progress through three stages in a pandemic risk assessment: preparedness, response, and recovery. Over the past year, businesses have undergone incredible changes—responding to the evolving impact of COVID-19 on our communities, lifestyles, and economy. For business leaders helping to steer their companies ahead, they must assess and strategize on how they will plan for the recovery phase of our transition forward.
To help your business plan ahead for pandemic recovery, we’ve gathered guidance to keep in mind:
- While cash-flow forecasts are never 100% accurate (and require ongoing updating), it’s critical to model several different scenarios. Understand and outline the assumptions involved with each scenario, and involve your whole company in the forecasting process. What will the key variables be for each part of the business? Stay in touch with your team, your customers, your vendors, and your bank. The information and resources they can provide are vital to your business’s financial health. When forecasting cash flows, it’s important to look to the future, but you don’t want to lose sight of your current cash position and immediate liquidity needs. Agility will be vital to your success.
- Talk to your banker. Ideally, you’re routinely checking in with your banker to discuss the ebb and flow of your business, any changes, and potential plans for growth. Hopefully, you’ve continued to have these important conversations during the pandemic. Your banker understands that there are many unknowns about the future and that forecasts are continually being updated. They also stay current with local economic conditions and industry-specific challenges. Be sure to keep them in the loop so they can provide guidance. How is your cash flow changing? Are you seeing new opportunities for your business? Are there scenarios where you will need access to capital to expand or change your operations?
- Check in with your accountant. If you were able to take advantage of Small Business Administration (SBA) or other government loan guarantee and forgiveness programs, be sure to speak with your accountant about the need for ongoing compliance and tax implications. Given the number of changes in the related tax laws, there may be additional credits or other benefits that may have become available; your accountant may be able to advise you.
- Review your financial controls. Depending on whether or not your teams are working remotely, it may be important to revisit your policies and procedures for financial controls. When the pandemic began, organizational workflows may have been changed—now is a good time to do an internal audit of bank account signers, digital banking user rights, services and transaction limits. Ask to review this information with your banking relationship manager. As circumstances change in the coming months, what user rights need to change? Do you have dual controls in place for the movement of funds? Are you using the best practices to prevent fraud? Have alerts been configured to provide notification of unexpected or unusual activity? Your banker can assist you in addressing these important questions.
- Maintain healthy records management. Your team may have been working remotely over the past year, and perhaps the filing cabinet stayed at the office. Maybe you had an electronic system up and running right away, or maybe it took a while to organize documentation. No matter the circumstances, you’ll want to be prepared for the auditor. Let your bank know if you need assistance obtaining details of transactions or access to statements.
- Identify financial activities that still need to be done in person. Plan to take necessary safety precautions, and remember to communicate with your banker on any accommodations you might need in the months ahead.
- Capture what you learned during the pandemic to enhance your business’ long term preparedness. Did you have access to the information needed to run your operations remotely? Could you make and receive payments and make deposits? Did you identify activities that were eating up your time or that compromised security? Review these findings with your banker to ensure you are taking advantage of best practices and available technology. (Related to this, organizations should consider evaluating their environment; they are likely going to be transitioned to a new mode going forward, and they should consider obtaining independent, objective evaluations to assess their security and operational practices. Your Banker can recommend resources and vendors.)
While we all hope for a speedy pandemic recovery, businesses need to be strategic about building resilient financial operations–and financial resiliency involves all areas of the business. As bankers, we want to see your business thrive, and we always welcome the opportunity to discuss laying out the groundwork for recovery with you.