Traditional financial controlling is not fit for the next 10-18 months

For finance teams and controllers, the coronavirus pandemic is particularly concerning. Uncertainty makes forecasting a difficult task, and the pandemic has increased it to historic level.

Global financial volatility, at a historic peak in mid-March, has yet to descend to pre-crisis levels, and US economic policy uncertainty has been similarly record-breaking in recent months. In Germany, business confidence has fallen precipitously, with the ifo Business Climate Index collapsing in March and April, before only marginally increasing in May. Even macroeconomic GDP forecasting has been greatly affected – single-figure percentage forecasts are being replaced with large, imprecise ranges – German GDP forecasts by Sachverständigenrat for 2020 vary from -2.8% to -5.4%, and 1% to 4.9% for 2021.

These sorts of statistics, their variances, and the ongoing and unresolved nature of the pandemic, indicate the huge challenges now faced by finance teams used to well-established and honed approaches to business forecasting. Old baselines are largely useless, and structures and processes are proving too slow, rigid and long-term-focused to respond to the rapidly changing landscape. To build resilience, survive and recover, forecasting departments need to quickly change their approach.

Thankfully, there is a guiding blueprint of action you can follow, based on a four-phase performance management best-practice approach developed by BearingPoint with extensive input from our clients: Shock, Cost-Saving, Restructuring & Consolidation, and Restart.

Corona crises may consist of four phases...

To not be a take over candidate within the consolidation phase and be in a good start position, effects and measures need to be planned and permanently adapted, immediately.

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