Unless you have been living in a cave in the last year, you probably have heard of the US-China trade war. The latest round of trade negotiations between Washington and Beijing that concluded on May 10, 2019 concluded without any deal.
President Donald Trump accused President Xi Jinping of backing out of the deal that the two delegations have been discussing over the last couple of weeks in a series of tweets so, on Friday the US hiked its tariff rate to 25% on $200 billion of Chinese goods.
As expected, China has expressed that they will retaliate. They have several options on how to go about retaliating – currency depreciation or targeting US farm exports are speculated to be on the table.
Nonetheless, this article will not go deeper into that trade war. Instead, this article will discuss the ways a CFO can protect a business from global uncertainty. This global uncertainty could be due to geopolitical issues, a serious global outbreak or change in consumer preferences.
Here are 5 ways a CFO or financial manager can protect the business from global uncertainty.
- Stay Current
The best way to fight uncertainty is to stay current. Make sure you read the news and look out for emerging economic trends or indicators. Knowing what the current global situation is, what politicians are discussing in various countries, potential regulation changes, and how businesses are roughly reacting can allow you to factor in things that can potentially affect your business operations.
- Demand Weekly Financial Reporting
Depending on the type of business you are operating, you might be making decisions based on economic predictions, but the truth is, that economic data will never give you guarantees. It is important that as a CFO or finance manager, you get weekly financial reports that are accurate and reliable. It may not tell you how the economy will fare in the next couple of months, but it will definitely guide you so that you can make the best business decisions based on current business performance.
We wrote another article about it which you can read here.
- Do What-if scenario planning
More often than not, the outcome isn´t always as you predict it to be. Therefore, a forward-thinking company must always run multiple scenarios, ask several what if questions and plan for those scenarios. Doing this will allow you to respond promptly and effectively whatever the circumstance. This will also encourage deep dive analysis and critical thinking.
- Make sure your budgets are up-to-date
Many companies today do their budgeting and planning or financial reporting in excel spreadsheets. The problem with doing budgeting in excel spreadsheets is that it is error-prone, labor-intensive, and requires a long budget cycle time that by the time budgets are ready, they have become irrelevant and outdated. To protect the business from uncertainty, you must make sure your budgets are dynamic and flexible and that updating them is easy so that you can react promptly.
- Build a Strong Network
A business that has good, strong, steady connections in its industry and outside is more likely to survive dark periods. The traditional way of investing in relationships still applies so that you can achieve business stability. These strong and healthy relationships you build now and, in the future, will carry you through hard times.
We cannot always prepare for all types of uncertainty and sometimes life will throw a hard kick in the gut just to spice things up a bit, but a business does not need to be scared. With sufficient preparation, a business can rise above it all. Needless to say, it is important that your business has access to accurate, and real-time financial insight so that it can make intelligent decisions that will enable you to take a step ahead of your competitors.
Performance Canvas Financials is a complete and cloud-based financial budgeting and planning software as well as financial reporting software that can help your business gain access to real-time figures easily. You can read more about how it works by visiting www.performancecanvas.com or you can email firstname.lastname@example.org for more information or to see a free online demo.
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