An unexpected COVID-19 benefit has been a deepened understanding, among finance chiefs, of how to respond to their company's customer and employee needs, CFOs said last month at the MIT Sloan CFO virtual summit.
Dell Technologies CFO Tom Sweet improved his team's FP&A capabilities, letting him run scenarios that helped the company confidently match products with customers, tweak its roadmap for future opportunities, and plan to overcome the next crisis.
"All crises are different," Sweet said. "But we're sharper now."
He's also improved cash management, and the company has become a better communicator.
"Communication practices we've put in are probably things we should have been doing all along," he said, referring to the more frequent and more detailed outreach to customers, employees and suppliers.
Payments fintech Square, which focuses on small and mid-sized businesses, doubled down on its online and omnichannel strategies after learning how its customers were trying to reinvent themselves to stay in business.
"High-end restaurants are now grocers," Amrita Ahuja, the company's CFO, said. "The neighborhood bakery is now selling online or offering classes over Zoom. Retailers are using Square to schedule in-person visits."
The company's business has grown 46% since the start of the pandemic, but much of that is coming from its newest areas of business: online transactions and a consumer cash management app, among other things. Its core in-person transaction business is down.
"We still have customers not processing at the levels they were pre-COVID," Ahuja said.
One of the metrics she follows to chart that performance, called gross processing volume retention, dove 50% in the quarter after the pandemic hit and remains down, although at an improved level.
In March and April, Square refunded its SaaS fees and let customers pause their subscriptions while they found their footing.
"We knew they were going through so much and needed extra cash flow in their pocket," Ahuja said.
Retaining new customers
Online retailer Wayfair was well-positioned to benefit from the pandemic as people stopped shopping in person, but success depended on the company handling the influx of new business correctly, CFO Michael Fleisher said.
"New customers were showing up and saying, ‘What's Wayfair all about? What do you guys do?'" he said. "Our business model is built on repeat business, so how do you serve them so they come back?"
Communications with suppliers is also key, he said, so the company communicated more frequently and with greater levels of transparency.
"Things we're doing now to intensify our relationships with them is something we'll keep doing even post-pandemic," he said. "It's good for business."
In addition to scenario planning, the CFOs ensured they had money to survive whatever the pandemic threw at them by issuing bonds or pulling parts of their revolving credit lines, although they ended up not needing the money.
"We were modeling off the 2008-09 financial crisis, which had a 28-month recovery cycle," Sweet said.
Based on that, he pulled some of Dell's revolver — "I thought it was cheap insurance," he said — and also issued $2 billion in bonds.
"We did have spirited conversations about whether to [pull the revolver funds]," he said, though they returned the money after three weeks.
Fleisher also raised capital right away. "In hindsight, it wasn't exactly when I would have liked to do," he said.
Once it became clear Wayfair benefited from the pandemic, Fleisher returned to the market and raised another $1.5 billion, but this time at much better terms.
"Business became so good so fast after that, we were able to go back out into the market … a couple of months later," he said. "It was interesting hearing from our biggest long investors how important they felt it was that we were thinking that way and bolstering the balance sheet, doing the things to make sure no matter what happened, we had the capital to run our business and continue with long-term plans."
To save money going forward, Sweet is planning to reduce Dell's real estate footprint over the next three years, by about 40% globally, mainly through attrition — letting leases expire rather than buying them out.
"We have sales and other offices that, when you look at utilization rates, it's time to do something different," he said. "We'll make sure we'll have collaboration space where we need it."
Square has given its 5,000 employees the option of never returning to the office again, but has no plans to shrink its space. About 15% of its employees have said they'd like to work remotely permanently and another 15% want to return to the office full time. The remaining 70% are looking for a flexible, hybrid arrangement.
"We probably won't have dedicated desks, but hotelling desks," she said. "and areas for people to get together."