The Pivotal role of the CFO during this crisis

Strong leadership from the CFO of any organisation is critical at this point in time. The challenges that many businesses are facing in an extremely short period of time are varied, with some companies losing a big chunk of their revenues whilst others have lost ALL revenues. Now, more than ever, Cash isn’t just king—it’s critical for survival.

At EMCS, based on our experience in helping clients through both internal and external crises, we delineate a number of actions that CFOs should take in the wake of the pandemic to put their companies on a sound financial footing and help reduce some of the fear and uncertainty. We can group these actions under 3 headings:-

  1. Immediate survival action
  2. Near-term stabilisation of the business in anticipation of the next normal
  3. Longer-term preparations for the company to thrive during the new normal.

1. Immediate Survival Action

We see that normally this is where CFOs excel. However I will still outline what could be rather obvious for many. The crisis, which has wiped out many revenues, is obviously having an immediate effect on liquidity, besides some disruption in supply chains. Thus, the top immediate priority of any CFO is optimising and defending cash reserves, as the magnitude and duration of the crisis remain unclear. Developing a scenario based liquidity plan would also help immensely. Many times we see that CFOs act rather quickly in this regard, while also moving to see what added capital they can access. At this point the impetus that CFOs put on cash collection and on receiving due payments in time, is much higher than ever before. It would be important that CFOs set internal mechanisms to prioritise payments and have an immediate reporting system to track liquidity in real time.

So where do we normally see CFOs fail at this juncture? At this point the CFO should be guiding the creation of a framework that a small executive team can use to make business decisions (to rationalise projects, for example) and monitor conditions so that, together with the CFO, they can track in real time the effect that cash decisions are having on the company’s ability to ride out the downturn and resume business operations once demand begins to bounce back.

Unfortunately we do not see this happen all the time. Rather than cooperation, there is a some friction and tension being created as the cash priority is not fully understood by other executives.

This leads us to the next very important point at this junction – A COMMUNICATIONS PLAN. As mentioned previously, the company’s primary finance focus during this period will be on implementing a “cash culture”—that is, preserving cash and deploying it dynamically. The CFO must communicate this priority throughout the organisation and help establish incentives to reinforce it so that all departments and business units understand “why this matters now” and what their specific role is in helping optimise cash. CFOs cannot expect that people will just change their mindset just because they issues orders or just because he/she is the CFO. The role of the CFO in communicating effectively is very important but, unfortunately, this is where we see CFOs fail most.

It is equally critical for CFOs to communicate proactively with the board of directors. The message should focus on the crisis’s actual and projected effects on the company, the actions being taken to protect the business, the liquidity situation, and any changes to earlier earnings commitments.

2. Stabilise the business

Once concerns about cash preservation have been addressed, the CFO needs to ensure that the company is positioned to operate effectively in this next normal. The CFO should at this point be looking at what operational moves can be implemented to support near-term performance improvements. For instance, to boost revenues, the CFO can promote the development of new products and services that will assist customers who are experiencing financial difficulties, thereby promoting loyalty from valuable customer cohorts. The CFO can actively reallocate resources to businesses with strong existing revenue streams and obviously optimise the company’s use of alternative sales and delivery channels, such as e-commerce.

We cannot emphasis enough the importance for CFOs to take decisive actions for reducing operating costs and discretionary spending – we normally see this happening quite efficiently. However, it will also be critical for CFOs to maintain some flexibility and to balance those reductions against the eventual need to scale operations back up as the economy recovers. This is a common mistake. Some CFOs, worried with the present crisis take irreversible decisions which inhibit companies to bounce back quickly in a recovery period.

CFOs should use this period of crisis as an opportunity to perform a deep diagnostic on the balance sheet—for instance, reviewing goodwill impairments; refinancing debt; reducing inventory, accounts-payable and accounts-receivable terms; and so on. This sort of balance-sheet cleanup can extend the company’s financial flexibility while keeping everyone focused on key metrics at a chaotic time. Additionally, CFOs should guide peer executives in a review of major CAPEX investments and use the opportunity to optimise the company’s investment portfolio. It is very likely that business units’ initial projected returns on investments will have changed significantly as a result of the pandemic. Finance leaders will need to quickly shift human and financial resources to higher-yielding projects and the initiatives most valuable to the company’s future.

With all the challenges that the CFO is facing with this crisis, there is also an opportunity. CFO has the opportunity of optimising and fine tuning the budgeting and forecasting work done within the company to make sure that updated business information is provided continuously and in time. Failure to do this may result in the demise of the company itself!

3. Thriving in the new normal

Once the crisis abates, senior management and the board of directors will want to move forward. To enable the company’s pursuit of bold strategic moves, the CFO, together with the leading executives, should now be focusing on strategic planning. The team will set the game plan for investments, portfolio shifts and all other major initiatives that will position the company to win after the pandemic.

There is a great deal of business recovery research out there. However I would advise CFOs to focus mostly on certain themes related to this subject – dynamic resource reallocation, strong capital expenditure and differentiation improvement, as I feel these are the most important.

By dynamic resource allocation, I mean taking on a complete transformational mindset not just some fine-tuning or touch up changes. The CFO would be well served to adopt a transformation mindset when they are setting targets, managing performance, constructing budgets, or challenging their business on growth or expense actions. The finance team should launch a review of the portfolio, with a focus on achieving the full potential of each business unit. This is a time to shelve incremental thinking and seek out transformational plans that could boost revenues or reduce costs—not by 5 to 10 percent but by 30 to 40 percent.


In the coming days, weeks, and months, as employees are struggling with anxiety about their health, their future, and their loved ones, CFOs must demonstrate empathy—but also bounded optimism that the organisation and its people will find a way through the crisis. The CFO can back up this view with clear actions and decisions. Regular communication is critical. This will help ease misgivings, decrease distraction, and keep people motivated.

No one knows how long the pandemic will last, but in time, business and daily life will find a new equilibrium. CFOs are key to ensuring that their organisations not only survive the current crisis but thrive in the next normal.

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Silvan Mifsud

Silvan holds a degree in Banking & Finance from the University of Malta and an MBA from the University of Reading, specialising in Corporate Finance and Business Leadership. Silvan has been involved in various sectors of the economy holding various managerial and directorship roles. Silvan is presently working as a Director for Advisory Services at EMCS, whereby he advises various businesses on their strategy, operations, corporate governance, financial performance analysis and sourcing their financing needs.