How to navigate a remote close during COVID-19

NextWave Private Equity

Karim Anani, Financial Accounting and Advisory Partner, and Lukas Hoebarth, Strategy & Operations Partner explain how to manage a remote close in today’s volatile financial and regulatory environment.

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While there has been a growing trend towards remote (or virtual) close for several years, the need for this capability has not only been accelerated but thrust into an volatile environment. Unforeseen complexity due to macroeconomic uncertainty, regulatory change, remote ways of working, incomplete information, workforce uncertainty and cybersecurity risks threaten vital systems of control that must now pivot to cover the risk mitigation they were designed to provide.

Private Equity CFOs and finance teams are instrumental in connecting the dots throughout the organization and will play a pivotal role as the business partner to the CEO. Analysis of short-term liquidity forecasts, tax implications and business plans will impact investment decisions and expose resource constraints across the private equity portfolio in the weeks and months to come.

In order for CFOs to cultivate successful remote close outcomes, they must focus on:

• Communication: holding regular meetings and establish expectations for communication
• Collaboration: establish and maintain healthy ways of remote working
• Preparation: organize a PMO to map the close calendar, identify exposure and predict/solve for different scenarios
• Motivation: keeping spirits high and nurture positivity

Five complexities will drive additional focus on the upcoming reporting cycle:

1. Delays in the close process due to remote ways of working, personal distraction and impact of available (or unavailable) technology
2. Different/additional analysis will be required to “close the books”
3. Incomplete information from upstream operational activities and suppliers
4. Sensitivity of data in a remote working environment brings cybersecurity and potential vulnerabilities into question
5. The ability to ensure the controls environment is sufficient to ensure accuracy for stakeholder signoff