4 Ways CFOs Can Help SMEs Recover From the Pandemic

The beginning of the 2020 pandemic was a time of overwhelming uncertainty which brought about a quick onset of changes in everyone's lives. Businesses of all sizes shut their doors so that their employees could remain safely indoors and slow the spread of the virus that had quickly made its way around the world. Some businesses were able to seamlessly transition their platform online and managed to survive through the waves of shutdowns.

Others were not as lucky. But with countless people out of work and unsure of where their next paycheck would come from, many individuals stopped shopping for pleasure. This meant that for some businesses, especially SMEs, the doors closed during the pandemic would never re-open despite their efforts to stay in business.

It's been over two years since the world health organization declared Covid-19 a worldwide pandemic, but the effects are still being felt by businesses and individuals alike. Though there have been many attempts to regain a sense of normalcy, all of which have slowly brought back the routines we were once used to, SMEs are still not completely out of the covid trenches.

To ensure their recovery and success, SMEs must turn to their chief financial officer (CFO) now more than ever to aid in their recovery from the pandemic. CFOs hold a senior executive position that works closely with the CEO of a company to ensure the financial well-being of a business. Though this position was once regarded as optional and only meant for bigger business, SMEs are finding great value in hiring CFOs to manage their finances.

However, CFOs aren't just overpaid members of a financial team. They hold many responsibilities within the company including, but not limited to:

Building a team of financial experts

Ensuring expenses and revenue stay at appropriate levels

Overseeing financial planning and analysis

Obtaining funding

Making recommendations on mergers and acquisitions

Working with different departments to analyze financial data and create budgets

Ensuring accuracy of financial reports

Consulting with the CEO about financial strategies

From this extensive list of responsibilities, it's clear that CFOs are valuable members of any SME. In addition, your CFO can also be responsible for getting your SME out of the covid trenches once and for all.

Here are a few ways that consulting with your CFO can help your SME recover from the pandemic

For a CFO to make informed decisions on how to move forward from the pandemic, an accurate understanding of where the SME stands financially is necessary. With many SMEs taking major financial hits throughout the pandemic, there may be some things that need to be readjusted within the financial budget to ensure recovery from this event. This insight can help a CFO make decisions about future inventory, expenses, hiring, and even capital investments. Certain expenses and investments may need to be scaled back to increase cash flow until they have recovered some of the losses suffered throughout the pandemic.

Once insightful data is gathered, your SME CFO can come up with a plan to slowly reinstate everything that was once budgeted for before COVID-19. This plan should be carefully thought out and presented to the CEO so that it can be approved and executed. Rather than guessing where your SME stands, having a CFO work closely with the data available can give you an accurate idea of where your business is financially and the steps it needs to take to recover from the pandemic losses. This will not only lower the overall stress but ensure that your SMEs doors remain open for the future years to come.

Having accurate reporting and insightful data about your SMEs financial status directly leads to being able to monitor and manage the cash flow of the business. Managing cash flow means keeping a record of all the cash that comes into the business and all the cash that leaves the business.

Cash outflow is necessary to keep a business functioning and its doors open. It includes expenses such as your SMEs monthly mortgage, bills, the price of materials, payroll, and much more. Without these necessary expenses, there would be no business to run. Having a high cash inflow is what keeps businesses in the game. Cash inflow is generated by sales, which results from high-profit margins, and your capital investments.

Your CFO should be able to closely monitor and manage your SMEs monthly cash flow and guide you in the right direction. If your cash outflow is higher than your inflow, problems are likely to arise. During the pandemic, there were probably a few months where your SME suffered from a higher outflow than inflow. However, as restrictions from the pandemic slowly dissolve, your cash inflow should start to increase. As this continues to rise, your CFO is responsible for constructing a plan to fill the gaps that were created during the pandemic and continue to build a big enough safety cushion to survive any new obstacles thrown your way.

The pandemic was a rude awakening for SMEs as many did not have a plan in place to face this kind of natural disaster. This led to them paying the price of having to permanently close their doors to the public and should serve as a lesson to the SMEs that managed to survive the wake of Covid-19. As SMEs move forward, having a short-term plan in place for how they should handle emergencies such as the ones created by the pandemic should not only be considered beneficial but also necessary.

Your CFO should meet with other internal departments to discuss the best way to handle the next short-term disaster so that a coherent plan can be put in place. This plan should include a structured outline of where the employees will work, such as a return to work from home, and the best way to execute it so that the business does not suffer financially.

If a short-term plan had been in place before the pandemic hit, SMEs would have suffered a lot less financial losses and more may have survived the pandemic. Moving forward, having a short-term financial plan in place is another way that your CFO can help your SME recover front the pandemic and prepare for the next unforeseeable disaster.

As an SME, nurturing relationships such as those between loyal customers, lenders, investors, and just about anyone else that interacts with your SME is extremely important. For some SMEs, the relationships that their CFO nurtured before the pandemic with important investors and lenders were the reason the business survived. Moving forward, your CFO needs to continue investing time and effort into those relationships as the survival of your SME depends on them. Regularly meeting with and interacting with them is not only important for the business as a whole but especially for the recovery from the pandemic.

As an SME, it can be hard for your CFO to manage all its roles and responsibilities, especially trying to recover from a pandemic. Partnering your SME with companies such as Fyorin can make your CFOs job a lot easier as they offer banking solutions to meet your CFOs every need. Rather than spending time nurturing multiple relationships, relying on Fyorin to automate and enable everything regarding your company's receivables and payables can drastically reduce your CFOs workload and speed up your SMEs recovery.

If you want to find out more about how Fyorin can help your business, please do reach out to us at sales@fyorin.com or read more below!