I first learned about the coronavirus in January from the news in Hong Kong.
I checked with my colleagues in Shanghai if they’ve heard of this new and dangerous virus, but they had not. I then asked our HR director to check with local authorities, and only then did it become real.
Once word started to spread, we immediately installed additional hand sanitisers and implemented hygiene measures at the office. Outside the office, people wore face masks in public and disinfectant supplies were sold out.
The seriousness of the virus dawned on me when I was stopped by a row of mask-wearing police officers and medics in hazmat suits on my way to — and then back from — our Shanghai office one day. When I finally reached my home in Suzhou, I immediately booked a flight back to Hong Kong — and I am still there today.
In Hong Kong, people reacted quickly. Even when the World Health Organization and the Hong Kong government toned down the seriousness of the virus, everyone put on masks, worked on alternative days from home, avoided shopping for non-essentials and generally didn’t visit others. We disinfected and removed our shoes before entering our apartments and immediately put worn clothes for washing. I think as a result, there was no lockdown in Hong Kong and our office remained open.
In China, it was similar. By mid-February, the staff started coming to our plants and offices; by month-end, production recovered to normal levels. We conducted temperature checks and issued fresh face masks daily, while public health checks were carried out by police and health workers for several weeks.
As I watched the news from Europe and North America and saw how unaware people were, I realised that a pandemic was inevitable. I also realised that just like SARS in 2003, this would eventually pass.
Coping with the pandemic: What helped?
Even though my company is based in China, we managed to avoid the destruction and disruption seen around many parts of the world. It probably helps that we don’t socialize as much here, which results in less human contact, but that is only a part of the construction.
Our company reacted quickly and set up a task force in early February banning all non-essential business travel and most visitors from our premises. Once the first cases arose in Italy and Germany (where we also have plants), we started planning for the worst scenario: deferring investments, cost reductions and weekly cash management.
What helped us was a high degree of automation. We employ driverless vehicles at our plants that transport materials between production areas and warehouses. At our offices, we run SAP, which is integrated into all Procure-to-Pay (P2P), Order-to-Cash (O2C), and Record-to-Report (R2R) operations for our shared service teams.
We also invested in people’s development for the future. I put four of my staff members on a tailored CIMA® programme, and they are now preparing for their Strategic Level exams. Two other staff are studying for CIMA on their own, and I’m looking to enrol two more. They receive a unique opportunity to develop their skills while the company enjoys high-quality work.
Here are some other ideas that I think would help businesses cope:
- Establish a management task force to oversee virus-related activities, monitor developments and plot the best course for the business.
- Assess the company’s relationships with stakeholders and start developing countermeasures.
- If the situation is difficult, prepare rolling profit forecasts twice monthly.
- Centralise all surplus cash in a pool managed by the treasury — this will ensure that parts of the organisation that need cash can be accommodated swiftly and without affecting external sources. Adapt the timing of inter-company payments to avoid realised FX losses.
- Monitor cash daily and produce rolling weekly cash forecasts for the coming 3 months.
- Review all capital investment plans and only initiate things that are essential to maintain the business, or to take advantage of profitable new ventures.
- Intensify product profitability and customer profitability analysis.
- Review staff resources and prioritise key positions.
- Think carefully about the skills required within the finance function and actively develop them — through closer coaching initially.
- As business stabilises and improves, introduce formal professional training for high potentials.
If businesses are well prepared and have invested in a strong agile finance function, they will be in a better position to work through the challenges. Many businesses will find it difficult to restructure and develop the required skill sets in a short space of time — but better late than never.
To learn more about how businesses can prepare for post-crisis reopening and adjusting to the new normal, check out our extensive business recovery toolkit.
About the author:
Dr. Aidan Goddard, FCMA, CGMA, is the Vice GM and CFO of Kärcher Investment China. He has been an active CIMA Council Member since 2016 and was previously based in the Hong Kong office of L’Occitane en Provence as Chief Financial and Operations Officer.