CFO Forum – Covid-19 | Thursday 2nd April

On Thursday 2nd of April, Michael Dickson (FWB Park Brown) hosted the first of our CFO Forums, via Zoom, bringing together a cross-sector group of 16 CFOs, representing some of Scotland’s leading organisations.

The purpose was to share experiences and strategies relating to how we are approaching the current financial and business challenges due to Covid-19. The conversation was conducted under Chatham House rules and a very open and valuable discussion ensued covering, amongst others, the following topics:

Liquidity and Cash Management

• For the vast majority, and certainly those not in food production or supply chain for the essential services, there has been a dramatic decline in demand for products/services (in some cases to almost zero overnight) and this strain has been exacerbated by the challenges in being paid by customers and in delayed access to funding. For many this included customers ‘going into hibernation’ and therefore stating they will not be paying invoices or giving any further business to them for at least three months.
• Ideas and measures taken ranged from: tighter but empathetic credit control processes and bridge funding through government relief or traditional banking, to cross currency swaps, bringing the RCFs onto the balance sheet and for those with ‘stock’ looking for options to return this or sell it on to businesses able to use the stock / in the ‘essential’ categories.
• Many believed there was a disconnect between new Government Policy and, although sympathetic, the ability of the banks to administer the funding quickly and efficiently enough. The attendees had varying levels of experience with both the Coronavirus Business Interruption Loan Scheme (CBILS) and the Job Retention Scheme (JRS / Furlough) and those more experienced offered to help those who were less advanced in their applications.
• Many organisations felt they were too big for some of the potential financing solutions but too small for others. Other sources of finance were discussed broadly, and it was felt that the CBILS scheme should fill this gap for many, although not all.
• The attendees shared their experience and advice in regards to communicating with Auditors in this current state, and the challenges regarding the ‘going concern’ declarations.

The Workforce

• The question was posed around whether it was felt that the Job Retention Scheme had avoided redundancies. Overwhelmingly the answer was yes, but many felt that if steps weren’t taken to end lockdown and the resulting suffocation on ‘non-essential’ businesses that this was just a delay of the inevitable.
• Some companies have been able to pay the extra 20% to employees, on top of the 80% furlough scheme. Others have not, and in fact have chosen to make wider ‘fair’ cuts in line with the Furlough Programme.
• Absenteeism, especially for those in production and ‘essential’ categories was discussed as a current challenge. Advice and colleague engagement methods were also discussed in regards to this with some having seen a reduction in absenteeism after purpose led and consistent communication as to why the employees work is essential. This focused on how well they are being looked after (social distancing and health measures in the factory) and assurances as to why this is not ‘profiteering’ but crucial to the country’s effort in fighting Covid-19.
• Others have chosen to take on interim staff to cover for both absenteeism and those colleagues unwell or unable to work due to their home circumstances. This is a demand FWB Park Brown has seen in our Interim Practice at a senior level as well, especially with many organisations approaching year end and their Audit.
• In amongst all of the corporate and logistical challenges, it is important to continue to champion the wellbeing and mental health of staff at this time, with many new professional and personal challenges being faced by our employees. Innovative cultural and staff engagement methods were shared including virtual team exercise, promoting virtual coffee breaks and more creative home and childcare support solutions.

Government Messaging

• It was agreed that as a business community we need to be clear and mature in our thoughts and expectations on how we expect the government to help both in the short term as well as throughout the rightsizing. However, it was also unanimous that the current messaging needs to be clearer to businesses, the public (i.e. our employees) and even the police.
• Construction is a crucial industry UK wide, and is also one of Scotland’s top industries. However currently the UK Government, including Michael Gove as recently as last week, have been encouraging this essential industry to continue where safe to do so. Meanwhile in Scotland they have asked all sites to close as it has not been ‘categorised as essential’.
• Furthermore, the clarity on who is an essential ‘in-office / on-site’ worker in production and distribution environments is also ambiguous and many workers, including delivery drivers, are being stopped and challenged by Police. This, along with fake news and social media pressures, breeds fear and furthers absenteeism and productivity challenges and is not fair on the organisation or even more so on the employees.
• Many businesses were operating based on ‘advice’ from unofficial government sources, the Police directly or with a view to working as best and safely as possible in the circumstances until being told otherwise. Clearly this needs clarity and uniformity.

Future Positive Outcomes

• The speed at which businesses have had to react and make significant changes to the way they function has been really impressive. Significant praise was given to the technology leadership and expertise in these organisations and how the, almost overnight, shift to digitally enabled home working processes have, in most cases, been successful. This raised debate and strategic questions about how we should operate in the future and where future cost savings and efficiencies can be found from this experience.
• Necessity has forced us to strategically challenge ourselves to find innovative ways of doing things. It was felt that in addition to technological improvements, this will have beneficial consequences in terms of sustainability and climate change, resourcefulness, profitability and employee well-being going forward.
• The attendees also discussed the identification of possible new revenue streams and/or a change in direction that may be required as they emerge from this. It was clear that attentions are now being, or soon will be, turned to the rightsizing of the business and economy as a whole and we believe that it is crucial that the government focuses more on the economic health of the country as soon as possible.

The CFO Forums will be hosted on Zoom weekly, every Thursday from 6pm.

For further details on this, or future events, please don’t hesitate to get in touch with Michael Dickson, Jamie Brown or Graham Burns on:
michael@fwbparkbrown.com
jamie@fwbparkbrown.com
graham@fwbparkbrown.com

For a downloadable copy of the above article please click here.

[divider line_type=”Full Width Line” line_thickness=”1″ divider_color=”default”]

FWB Park Brown
FWB Park Brown continues to deliver its full range of services which includes providing support and advice during the Covid- 19 Public Health and developing global economic crisis.
We have established a range of cross sector as well as sector focused discussion forums for Chairs, NEDs, CEOs and all the main business management disciplines.  We are also working closely with the Scottish HR Leadership Group to provide constructive support including discussion forums and Q & As.
Summaries of the discussions will be posted on our news section and also on LinkedIn.
For further information about any of these forums please contact us via enquiries@fwbparkbrown.com