Remote work started gaining steady speed and momentum before the pandemic. With the onset of the Covid-19 crisis, the world shifted to a remote, work from home structure. This led to exciting times for several large and small businesses since maximum overheads were reduced for rent, travel expenses, expensive office costs, and more. However, it also gave rise to budgetary allocations, international time restrictions, and video conferencing difficulties, with most C-level executives adjusting to new budgeting parameters and managing remote teams.
CFOs and CEOs need to combine strategy with resources and reinvent budgeting processes to fit the new needs of remote working teams. After several months of innovation and improvising, older budgeting and accounting standards were not going to be effective.
How can C-level executives remake and manage the budgeting processes for remote teams?
While starting the stress test, CEOs will have to pressure-test all relevant scenarios, decisions, and assumptions previously made during the pandemic and the surrounding crises. This review should be critical since different parts of the business will have differing needs, questions, and responses to the same or similar issues. All teams must be on the same page for the budgeting process.
All teams will have to understand when the next economic pickup and return start and how to budget for all expenses and travel effectively. CEOs would also have to make special considerations for visas, Covid tests, safety measures, precautions, and immigration processes when it comes to travel. Hiring an excellent work visa attorney to take care of the legalities and documentation will prove fruitful in the long term concerning the ever-changing landscape of laws and regulations.
Senior leadership will have to:
Zero-based budgeting principles were usually considered a last resort. These budgeting processes are needed to help understand the critical business drivers that aid in justifying all expenses in the budget. While it involves too much micromanagement and is an arduous process, current scenarios have proven the need for zero-based budgeting.
The Covid crisis has forced leaders to stop thinking about whether to shift budgetary allocations and instead has invoked an urgency towards aspects of where to move and how much. Medical and hospital-based businesses have considered budgetary reallocations from travel budgets and annual conferences to work-from-home and online pharmacies and telemedicine. This critical step requires a mindset change in moving resources to enable areas that were considered futuristic but are now the needs of the hour.
Most CFOs have had to rely on zero-based budgeting principles to get a clearer view of opportunities and risks in multiple business segments. Prioritization of critical projects, redoing variable versus fixed costs, and determining the financial risk factors have helped keep the lights on and support the economic recovery process after the Covid-19 crisis.
It is no surprise that CFOs and finance teams have had to work remotely on shorter cycles and support high-risk planning and budgeting decisions. At the start of the Covid-19 crisis, most C-level executives had to offer ad-hoc solutions, involving time crunching, bootstrapping, and never-before-tried resolutions to complex workplace issues.
Since then, the emergence and acceptance of digital and online remote working tools have taken some pressure off the immense stress on CFOs to pick up the pace in the crises. To guard against future burnouts, CEOs, COOs and CFOs have to take measurable steps to set models that break down the revenue to cash (P&L accounts), timelines, outputs, and analyses with fully functional operational KPIs.
Reassigning the top-down approach in a functional, efficient manner in a remote working environment to save on extraordinary expenses will help financial leaders in the company get perspective on which projects, tasks, and assignments need priority and allocations. Keeping a tight rein on budgetary allocations for remote teams and reprioritizing will help get a pulse of the situation without firefighting to allocate funds in the long term.
CFOs can strengthen their position and emerge as critical thought leaders by linking operational KPIs with real-time data and strategic plans about remote work solutions. Essentially, CFOs need to be transparent about the budgetary reallocations, employee incentives, performance targets and reviews, and abilities to meet the targets. CFOs can reimagine budgeting models to help cope with the challenges and requirements of remote teams by deploying funds on a few cost categories that create maximum impact and value to the business.