A sudden change in economic climate can happen anywhere, to any business, at any time in today’s connected world. The global onset of COVID-19 has had a quick and damaging effect on the economy, forcing organizations across all industries to adapt to new ways of doing business and retaining customers.
While finance teams in every company have been tasked with managing cash burn, loss revenue and customer churn — a new normal has emerged that many experts say is here to stay. What is this new normal impacting finance departments? What role can technology play in bringing efficiency and agility? How are they moving their business forward while managing compliance, governance and their order to revenue process?
Has the role of finance changed for good?
To determine the true impact of COVID-19 on finance and understand how finance professionals are reprioritizing and evolving during this time, Zuora teamed up with Avalara to survey hundreds of finance professionals globally – from individual contributors to finance managers, controllers, CAOs, and CFOs.
Key findings from the survey underscore the shift in priorities and the critical inflection point for finance.
From managing near-term cash flows to business continuity planning, finance teams are working diligently to ensure their companies weather this storm and are prepared for the next “normal.” But are they concerned?
Unsurprisingly, the answer is “yes.” Approximately 97% of respondents reported to have some level of concern now, and over the next 6-12 months with forewarnings of a second wave of the virus, about COVID-19’s impact on their business. But this concern isn’t just about financial decline. According to the survey, finance professionals also have deep concerns about employee health, financial decline, supply chain disruptions, and more. And, in a ranking of business impacts they are most concerned about, respondents identified decreased revenue and profit, decreased customer acquisition, and staffing changes (layoffs, paid leave, etc.).
While today’s health crisis is forcing businesses to react quickly to unprecedented and unpredictable market conditions (both internally across employees and externally across customers), and the current concerns for finance professionals are a very valid reality, having a recurring revenue model has eased the concern of some.
With more than one-quarter of respondents confirming that recurring revenue accounted for more than three-fourths of their business, nearly 40% of respondents said that a subscription business model eased concerns surrounding the future of their business. And 60% said that ecommerce and subscription billing software, specifically, have been helpful in today’s economic downturn (our latest Subscription Impact Report underscores this claim, as 4 out of 5 businesses are still growing given the resilient nature of subscription business models).
But in order to remain resilient amid these hard times and best position their businesses to scale in a post-COVID world, organizations must double down on customer relationships to retain them in the long term. That’s why, aside from employees of course, customers topped the list of the audiences that are a priority for finance today.
But, what do customers have to do with finance teams? Finance professionals reported that 60% of respondents said that customers have been seeking delayed payments and/or credits for their company’s services. This can have downstream impacts on cash flow and keeping the books in order.
As a result, finance teams globally are becoming key stakeholders advising the entirety of their business on go-forward plans – 80% of financial professionals confirm they have been very or somewhat involved in their company’s internal and external response to COVID-19. And, unsurprisingly, technology has played a critical role in ensuring bottomline business objectives are achieved.
Nearly 50% of finance professionals stated that finance automation technology has helped their business handle the financial changes that have arisen since COVID-19. The data shows that finance teams continue to look to automation to streamline their financial processes, with Billing and Invoices topping the list of priority finance functions to automate and migrate to the cloud (33%), followed by Collections and Payments (28%), and Forecasting and Metrics Reporting (28%).
The impact of COVID-19 is clearly accelerating the evolution of the finance function — from becoming key advisors to help navigate this storm, to providing confidence to the larger organization around customer strategies and automated processes. Today’s finance professionals have been elevated to be external facing: prioritizing their customers changing needs, guiding the path forward for their businesses, easing internal and external concerns on their strategy to determine the long-term impact of today’s crisis and, ultimately, emerging ready for a new normal.