Cloud-based platforms are ideally suited during the novel coronavirus outbreak to help CFOs and their finance and accounting teams get reports and other must-do tasks done while working remotely, but many are behind the curve on this, CFOs say.
"How much of an impact [the coronavirus outbreak] will have depends on where the infrastructure of your finance department currently sits," Jason Lin, CFO of Centage Corporation, a Massachusetts-based software company, told CFO Dive. "If it’s completely in the cloud and you’re fully automated, there’s much less impact because your team can work remotely."
States are starting to impose restrictions on where people can go and limiting the size of gatherings to prevent the outbreak from expanding. New York, for example, created a containment zone around New Rochelle, a hard-hit community in Westchester County, New York.
"The biggest issue becomes whether people come to work or not," said Bill Koefoed, CFO of Michigan-based OneStream Software.
Unlike in the aftermath of the September 11 terrorist attacks, when some areas and institutions were subject to lockdowns, CFOs have access to cloud platforms so their teams can carry out their tasks if they’re set up to do it, said Koefoed.
"I remember 9/11 like it was yesterday," he told CFO Dive. "The country shut down. People weren’t able to communicate. They could talk on the phone obviously, but they couldn’t do work."
Koefoed said you’re looking at delays of weeks "at a minimum" as a result of restrictions on people coming to the office if you’re still using on-premise software.
Even though Centage is a cloud-based tech company that focuses on helping finance and accounting functions operate optimally, Lin said, probably 10 to 20% of his own teams' functions are still premise-based.
"Finance departments are behind the curve when it comes to cloud solutions," he said. "Accounting teams are seen as back office functions that don’t generate revenue for the company. Very often they’re the last to get investments for upgrades to cloud technology."
By contrast, marketing and sales departments, which generate revenue, are much more likely to be on the cloud because their functions are seen as more critical to the business, he said.
This foot-dragging on getting back-office functions onto the cloud is one reason Centage’s major competitor in the budgeting and forecasting space isn’t another cloud-based solution, but Microsoft Excel.
For finance functions still using this premise-based solution, they remain dependent on technologies that require employees to be in a particular physical location for routine reporting tasks. For that reason, as the outbreak spreads and more areas are put under quarantine, companies using desktop solutions may be facing a major disruption.
Video conferencing can be a great help. Koefoed recommends finance chiefs hold their meetings virtually, even if they’re not under quarantine.
Separate from logistics are manpower issues: you need to have a back-up in case one or more of your team is infected with the virus, making it hard for them to work even at home.
"Look at what talent has been lost and prioritize … functions." he said.
"If one staff accountant gets coronavirus, then you’re talking about significant disruption to your financial reporting," said Lin. "If that happens, then another person on that team should know exactly how that person functions and what he does, and can pick up that person’s job and work overtime if needed ... A single point of failure in the system shouldn’t disrupt the whole department."
In a nod to the uncertainty CFOs are facing today, the SEC on March 4 granted a 45-day extension to file reports that would have been due between March 1 and April 30. A longer delay is possible if a case can be made for it.
The IRS is also widely expected to grant an extension to the April 15 tax filing deadline.
However, the SEC reporting extension might not apply to every public company. The SEC’s announcement states that it includes companies "in the affected areas, as well as companies with operations in those regions." Of course, if the pandemic escalates to all parts of the United States, then most companies will be able to take advantage of the extension. But the announcement should not be taken as applicable to everyone.
Creditors present another problem. The FDIC has issued a memo stating its awareness of the pandemic’s possible impact on banks and their customers, and says it "will provide appropriate regulatory assistance to affected institutions subject to their supervision." Also, the agency asks banks to take the pandemic into account in their dealings with customers.
For private companies, reporting duties involve communications to the board of directors. In a worst case scenario, where staff could not produce the deliverables, "We would approach the board and ask if they were okay with a delay in financial results this month while we worked through our resource issue," Koefoed said.
While few executives predicted a business-impacting event like the coronavirus pandemic, it’s also true that companies are taking action. According to Justin Wolz, spokesperson for SAP America Inc., "We have distributed communication guidelines to all employees including contingency actions and precautionary recommendations such as working from home after a business trip to an affected area."
Koefoed advises CFOs weigh things carefully. Pointing to the long period of sustained growth and low unemployment rates of the past decade, he cautions against taking drastic actions with far-reaching consequences.
"CFOs have to assess whether the coronavirus problem is going to have a long- or short-term impact on their business. You don’t want to do dumb short-term things that may harm your long term strategic performance."
The good news is that CFOs don’t tend to be panic. "CFOs, for better or for worse, are generally unemotional about these kinds of things," he said. "It’s unfortunate when things like this happens, but it’s also an opportunity for them to show their worth as a strategic partner to the executive committee."