The Covid-19 pandemic has fundamentally changed the way that most of us work. One of the most visible examples is the growth of remote office environments and they are likely to continue, in one form or another, after the pandemic ends.
But there are many other less visible but equally important changes governing the way that companies manage their businesses. At THP, there isn’t a single department, which hasn’t needed to adapt to the different world that we find ourselves in. But many valuable lessons have been learned in the process.
One particularly key operational area is finance. Solid inputs into cash flow forecasting and budgets are central to any company’s smooth running. Certainty is, therefore, something that CFOs and treasurers prize extremely highly.
However, over the past few years, the pandemic has frequently and rapidly up-ended carefully crafted financial forecasts. This has presented finance departments with some enormous challenges.
The most testing one for THP was the adoption of the government’s three-on-the-spot policy to try and contain the virus and keep factories running. This policy of bringing employees to work, eat and sleep onsite had to be planned and rolled out in the space of just two weeks last summer.
It necessitated a massive shift in resource allocation. Indeed, over the course of 2021, we re-assigned a big chunk of our advertising budget to production and employee health.
Having to react so quickly underlined the importance of baking more flexibility into budgeting and broadening our scenario planning to anticipate more potentially disruptive events.
THP’s experience mirrors many of the points that McKinsey made in its 2020 report – memo to the CFO: a new approach to budgeting starts now. The management consultancy noted how Covid-19 has forced CFOs to re-think the way they handle financial planning.
And the conclusion that McKinsey’s surveyed CFOs came to was the same one that THP has: “the business-as-usual budgeting processes with its traditional inputs and standard approaches” is “no longer fit for the task.”
Some of the proposed solutions include streamlining “overall budgeting process to react more quickly and efficiently” and introducing more rolling forecasts.
For THP, Covid-19 has also reinforced why the first of our seven core values is so fundamental to the kind of company we are. It places customer satisfaction at the very heart of our operations: meet the demands of customers, partners, suppliers, and related parties to achieve mutual goals and expectations in a timely fashion.
We consider ourselves part of a mutually supporting network of partners. Their cash flow is just as important as ours.
Covid-19 has been severely disruptive to many supply chains. However, one of our key priorities has been ensuring that we made timely payments to all of our suppliers so that they too can maintain uninterrupted operations.
The same applies to customers. We don’t want to put them in a position where they have to wait after making a payment to the bank.
