China’s economy, boosted by government investment, continues to recover strongly from the COVID-19 pandemic. Fitch Ratings revised its 2020 growth forecast to 2.7% in Aug. — up from 1.2% in June.
It’s not just the Chinese economy that is bouncing back, either. Chinese finance teams have also enhanced their capabilities during the pandemic and are now even fitter and stronger than they were before.
In a recent discussion, members of the North Asia Regional Advisory Panel for the Association of International Certified Professional Accountants shared their views on how finance professionals have responded to the crisis by becoming even more effective business partners. Their main observations were:
- The finance mindset has changed.
In the past, some finance professionals may have been resistant to change. The events of this year have made them more willing to embrace change, however, and to find more ways to communicate with other business functions. Often, they are using technological tools to do this.
- Visibility of cash is a priority.
Earlier this year, many smaller businesses in China were struggling for survival due to cashflow issues. Finance professionals have been providing cashflow analysis to help businesses gain visibility and control over their cashflow and to make informed decisions around inventory and procurement. Businesses are speaking to customers and suppliers to verify demand so that they avoid having too much cash tied up in inventory should market conditions take a turn for the worse.
- Digital transformation continues to accelerate.
The finance function was undergoing comprehensive digital transformation even before Covid-19 struck. Unsurprisingly, the importance of technology has further accelerated during the pandemic. Finance teams are using powerful business intelligence tools to turn raw data into information that can be the basis for management decision-making. They are also using online collaboration tools to connect with colleagues and customers.
- Volatility is being factored into decision-making.
When finance teams work on investment proposals, they now factor extreme volatility into their planning and consider a wide range of scenarios. They are also using more external information – such as what competitors are doing – to inform their analysis. In contrast, they may have previously paid more attention to internal benchmarking. By providing more in-depth information that considers a variety of outcomes, finance professionals are supporting better management decision-making.
- The voice of finance is becoming more important.
When times were good, companies did not necessarily need to drill down into the detail of their finances. Now, however, they need specifics on the performance of individual businesses so that they can take a bottom-up approach towards improving their overall financial situation. Companies appreciate the relevant, timely information that finance teams can provide via dashboards. They also need the support of their finance teams to apply for COVID-related subsidies from governments in different regions around the world.
While Chinese businesses are looking forward with confidence, they are also focused on staff wellbeing and ensuring a healthy cashflow to maintain the continuity of their operations. They are benefitting from the support of their finance professionals, who are providing them with good, timely information and deep insights into their business model. As a result, they have the firm foundations to turn this period of crisis into a period of opportunity.