Finance strategy 7 min read

A 5-step crisis action plan for finance teams

Fabien Dawidowicz

There’s no perfect way to manage a crisis. Not when it’s relatively minor, and certainly not when we’re talking about a global pandemic. 

Companies everywhere are facing tough times. Which means that, now more than ever, businesses rely on sound finance leadership. You have the data, the skills, and the wider company perspective to guide the ship through choppy waters. 

So faced with uncertain and perhaps unprecedented circumstances, how should finance leaders respond? 

I was happy to share my thoughts during a live “ask me anything” session with the CFO Connect community. You can watch the full session any time here.

The questions in that session were broad and far-reaching. But I’ve distilled our discussion down into this 5-step action plan for finance teams

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1. Ensure that all teams can communicate easily

Finance teams do their best work when the company is running smoothly. In a crisis, smoothly may not be possible, but you need to have the company up and running. And in the current climate that means you may suddenly have a fully remote organization, almost overnight. 

Spendesk went remote prior to being requested by the French, German, or American governments. It was clear that a lockdown was coming, and it was also clearly the best way to keep employees safe and healthy

So we had a small window to prepare our teams, collect any essential equipment from the office, and be ready to operate once the lockdown was in place. 

But it was still strange. We usually wake up in the morning and go to work in our lovely Paris headquarters - but this is now impossible. So we had to be sure that everyone in the team has the tools and materials they need to work. 

Obviously, a laptop for everyone. And the right SaaS tools to work in the same conditions as they would in the office

We even had 10 new staff to onboard for their first day, completely remote. So we had to get them their computer, and take them through onboarding workshops from afar. They met their managers at a distance, and have had to dive into their different subjects like this too. 

All things considered, this went really well. The routines we’ve put in place really paid off.

Communicate to reinforce culture

While remote, there’s obviously a risk that employees become demotivated, disconnected, and depressed. But there are positive ways to keep spirits (and productivity) up.

We've organized new routines and games for our teams. For example, we had a blind test (music quiz) during our most recent company retro. That let us spend half an hour all together and do something positive - aside from work. 

We also set up a special Zoom room that lets people join any time. It’s a rolling meeting where people can come and go, have a conversation over tea or coffee, and then carry on with their day - basically a digital water cooler. 

People need to be able to maintain the rhythm they had previously - to be able to bump into their colleagues without planning a formal meeting. This informal space lets them do that.

Not only open, but transparent

It’s never fun, but budget cuts are also a reality for many businesses. Twice in my own career I’ve faced situations where we didn’t have any more cash. Where we were postponing our own salary payments to pay others. Thankfully that’s not the case for us today.

Before really getting into the budget cuts, you have to be clear with employees about what’s happening. And also what kinds of effort you’re going to make in the future to avoid further issues. 

From my own experience, transparency is key

So it’s really important to share the situation with employees and to try to find solutions with team managers. There will usually be ways you can work with budget managers that aren’t all doom and gloom. It’s just part of their jobs to be able to operate with a lower budget from time to time. 

At Spendesk, we’re not talking about letting people go. As we’re in a fast-growing company, we always have something we can do or processes we can upgrade. We can always find productive, value-adding steps to take even if we’re not selling at the same rate as before. 

2. Create your short-term action plan

finance-team-crisis-plan

So first, you make sure that employees can communicate and people can still work. But immediately after that, it’s time to build a response plan

Our Chief of Staff Guillaume was able to gather all the team leads together in anticipation of going remote, to revamp our strategy. We looked at the nitty gritty - would we be able to reach our targets under these new conditions? Would our cash burn rate change, or could we keep this at a reasonable level? 

We spent the first few days of the crisis building our refocus plan. This included looking at the likely costs we would incur - both through new inefficiencies as well as potentially reduced revenue. And we also identified potential savings we might see as a result

Other team leaders looked at their own gameplans to see what would need to change. The Product team is working hard to figure out what features or tools would be most useful for clients right now. We know we have some that are ideal in this situation - virtual cards and approval workflows for budget managers, for example. So we’ll likely make these available to more clients and create new pricing structures to do this. 

And as a finance team, we were there to discuss their budgets with them and see if some money could be put to better use. 

One important part of this was HR. We felt it would be necessary to reallocate part of our HR budget to spend on our employees’ wellbeing. We freed up some cash to help team members take care of themselves. They now have a budget for online yoga or fitness classes. 

It’s really important to focus on supporting our teams and our clients at the moment. That’s really key. 

3. Get a firm handle on cash and costs

The most important financial processes relate to controlling cash. Cash in and cash out. Obviously we don’t have a problem managing this with Spendesk, but many companies will be struggling. 

If the virus doesn’t have a major impact on revenues, then you can essentially continue as before. But if it does have a serious impact, you’ll need to look at costs and try to identify savings. If you’re in France, for example, you should start by looking at what the government has proposed for tax and social security. And governments all over the world are implementing similar measures.

Re-forecasting

This is a huge topic for CFOs and FP&A teams at present. Essentially, your previous forecasts have gone out the window. 

To help us forecast (or re-forecast in this case), we’ve built different models for these scenarios in terms of time and financial impact. We have models assuming 30% reduction in expected revenue, 50% reduction, and even 70% reduction. And then we can identify the necessary costs to cut in each case.

It’s still too early to accurately say where we’ll fall, or if we’ll take a revenue hit at all. But once we have a few weeks’ data we’ll be able to make decisions based on these models

Depending on your level of cash flow, reforecasts in this period might need to happen at different rhythms. In some cases, it could be day-to-day - for instance, if one or two clients can’t pay and that would severely impact your cash. 

At the very least, this would be a good time to talk to your own suppliers to see if you can change your frequency of expense payments. 

4. Call key suppliers

cfo-call-suppliers

One issue for many business will be keeping up with their own payments. Things like rent, payroll, and insurance can be a problem. But if you have a good relationship with suppliers, there is probably already some wiggle-room in the timeframe for payments - 30 days is usually not a major issue. 

I do believe, however, that delaying payments hurts everyone. We’re all in the same chain here. If we delay payments to our suppliers, and our clients delay payments to us, it’s going to hurt all of us eventually.

So talk to your most important suppliers and find out what they can do in the circumstances. I did this with our landlord, just to see what their expectations were. This lets us explain our own situation to them, and come to an arrangement if we need to. 

In our case, the French government has also set up some solutions for companies. So we can deal directly with our bankers, social authorities, and landlords. These solutions help us optimize our cash. 

I called all of these vital suppliers right away to make sure we all understand the rules in the same way, and to keep an open and happy relationship during this period

5. Help your clients now more than ever

Spendesk is here to help businesses. During this period, we have this obligation more than ever to see them through difficulties. And our customer success team needs support from everyone - including finance and leadership - to help them handle the situation successfully.

And our clients are not all tech companies like us. They might be in hospitality or hosting events - industries which are suffering right now. 

And despite being Spendesk users, they may not have the most up-to-date processes and technology in place. For example, we’re doing a lot more accounting exports and helping clients build reports at the moment, because many of them don’t have access to their accountants or accounting software. They still need to close the books for the end of the month, but this month they’re on their own. So we’re here to help them do that.

We truly believe that times like these will prove the value of Spendesk for lots of businesses. 

And on the other hand, we’re actually signing new clients during this period who were in the process of implementing much larger, more complex tools. Suddenly with their team fully remote, they need something more user-friendly and quick to set up. And Spendesk is perfect for that. 

What about fundraising? 

This is a very interesting time for companies trying to raise funds. You’re going to find out right away the quality of the VCs you’ve met. If you’ve signed a term sheet, and the VCs want to hold off for now, maybe you teamed up with the wrong investors. 

VCs are used to these kinds of situations - most have worked in blue chip companies and have faced this before. People my age have been through major crises before - 9/11 and the 2008 global financial crisis are examples. These things happen from time to time, and we’ll have more in the future. 

If you’re trying to fundraise right now, the best thing you can do is continue performing and manage the situation as well as possible.

By the end of the virus, I’m confident that this revolutionary period of digital transformation will continue, and we’ll see the same hypergrowth we’ve already witnessed.


Keep calm and focus on the numbers

Despite the tough circumstances, working remote is a fascinating experiment. As we prepared for this last week, it was really tricky to think about how to reorganize our teams and processes with everyone spread all over Europe and North America. 

Now that I’ve had four or five days, it’s clear how much can be achieved with small changes to processes

It has also helped us identify new characters in our company - people who are highly positive or really creative in ways I didn’t know about. We have team members finding really interesting solutions to new problems. 

Most of all, this period identifies our biggest priorities for us. We now know what the essentials of the business are in a more profound way. So once we’re back in our classic Spendesk mode (following the crisis), we’ll be able to emphasize those even further and be a stronger company as a result. 

If you’re working through the same issues at the moment - and pretty much everyone is - please get in touch if we can help. Good luck!

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Fabien Dawidowicz

Fabien Dawidowicz is CFO at Spendesk, where he helps finance teams manage spending easily and effectively.