How Has The Covid-19 Pandemic Challenged Finance Professionals?

Given the extraordinary circumstances of the past year, the decisions of finance professionals have taken on even greater significance than had already been the case. Typically, of course, deliberated financial management can be the making of any business – underpinning their ability to invest, scale quickly, or firming their capacity to withstand economic shocks.

Professor Arif Khurshed, Professor of Finance at the Alliance Manchester Business School, explores the impact of the coronavirus pandemic on finance professionals. 

It is for this latter reason that the role of finance professionals has taken on such importance of late. Even as the worst social and economic impacts of the pandemic seem to abate, this remains a time of unprecedented uncertainty – as such, the survival of an organisation may well hinge on how successfully its resources are protected and distributed.

The latest ONS figures paint a striking picture of the economic turmoil many have faced – in Q1 2021, 111,145 business closures were recorded, a 30% increase on the 85,115 logged in Q1 2019. It must be noted that shrewd financial management may, in many cases, still not have been enough to save an organisation – though it will have been critical in the survival of many. What’s more, as the economy begins to reopen and most sectors have resumed more normal levels of trading, the skill and nous of finance professionals will be critical for the success and speed of their business’ recovery.

The challenges posed to finance professionals

The broader difficulties invoked by the pandemic are clear to see. A study conducted recently by Nerdwallet among more than 900 UK business managers found that a majority (54%) had felt the last year to be the most stressful of their professional careers to date.

Finance professionals have been required to keep abreast of an unsteady business and consumer landscape, with incrementally lower levels of confidence in long-term planning. For instance, businesses in different regions were affected by separate lockdowns on top of the broader national restrictions, new financial support schemes were implemented quickly and then variously adapted as the circumstances evolved, and of course the bigger picture of the national economy and pressures influencing downturns – each of these elements needed to be constantly monitored and understood. The pressure on financial decision-makers has, therefore, been intense.

Just as quickly as the pandemic set in, business and consumer behaviours were radically altered. With non-essential retail closed for large swathes of the past year, and social distancing measures limiting contact within businesses, demand became focussed in certain areas. Notably, there was a boom in eCommerce spending as businesses rushed to meet consumer demand where possible. In response, financial management teams were required to assess the ongoing viability of their business’ product or service, and to ascertain where credible alternatives could be beneficial to operations – all while evaluating their customers’ continuing capacity to make payments.

Supply chain disruptions have caused further headaches since the start of 2020. The aforementioned eCommerce boom flooded the UK’s domestic shipping capacity with products usually purchased in person or on the high street. Meanwhile, international freight faced a more visible crunch, with delays becoming commonplace and costs constantly fluctuating (Brexit only complicated matters). In this case, finance professionals needed to understand the broader consequences of every development, and to some extent predict a course of action to protect the financial health of their business from any further disruption.

While significant, these issues are just a snapshot of the mounting tasks facing financial management teams through the pandemic. The costs and benefits of remote working, balancing the furlough scheme against critical productivity, tightening access to finance, redundancy measures, and disruptions to supply chains and investment flows have, among numerous other factors, been part of a breadth of considerations necessary for finance professionals to keep businesses going.

Focusing on the core skills

The optimistic view is that the worst of the pandemic, in the UK at least, has passed. The economy should become increasingly liquid, a bottleneck of reserved investment should begin to release, and businesses will likely demonstrate revitalised confidence and eschew necessary risk-averse behaviours from the past 12 months. The question that must be asked, however, is what have we learned about financial management throughout the pandemic, and how can it be applied to the profession even in a return to ‘normality’? One of the crucial lessons of the past year has been that there is no inopportune time for finance professionals to refine their core, fundamental skills.

It is important to elaborate that the University of Manchester’s newly launched MSc in Financial Management, unlike many other academic programmes, has not had to be rewritten on the basis of the pandemic; instead, its key guiding ideas have been emboldened. Those with a robust knowledge of fundamental and broadly applicable finance concepts and instruments will likely have fared best over the past year, relative to those specialising in managing the economy of specific sectors or individual businesses.

In this case, skill and talent are twin forces underpinning the success of a financial management team. Naturally, hard skills will be critical, but soft skills are equally essential in a challenging situation. For instance, the ability to communicate effectively and efficiently, with consideration to the challenges and anxieties faced by other people within the organisation, will have been vital in protecting morale and executing plans. The development of such soft skills is an integral part of the learning outcomes of the MSc Financial Management.

Grappling with these issues will leave finance professionals well-placed to handle the period of recovery over the coming months and years. Recognising successes and failures and addressing those gaps in skillsets uncovered by the pandemic, will be of great importance not only in the instance of a further crisis at some point down the line, but in the day-to-day management of their business under more predictable conditions.

Professor Arif Khurshed is a Professor of Finance within the Division of Accounting & Finance at the Alliance Manchester Business School. Prof Khurshed lectures at part of the University of Manchester’s blended learning MSc in Financial Management, which equips its students with a deep understanding of the tasks finance professionals undertake, and the skills required for a successful career in finance.

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