Getting fit for business: Forecasting and managing costs

Similar to other territories, Malaysia has not been spared from the impact of COVID-19. The Movement Control Order (MCO) was implemented on 18 March to mitigate the spread of COVID-19.

As of the sixth week of the MCO, we saw some positive developments with a drop in number of new cases¹. However, there has been a lack of business activity prompting the need for organisations to take a number of critical actions to get ready post-MCO. 

For many business leaders and decision-makers grappling with the COVID-19 outbreak, the immediate priorities are people and cash. They’re ensuring employees are safe, empowered to take care of themselves and their families, and have the support and resources to work remotely for the foreseeable future. They’re also focusing on business continuity and cash flow.

But what about medium-term decisions? 

• PwC has been tracking CFO sentiment bi-weekly as part of the CFO Pulse² Survey to assess how companies are responding to COVID-19. As of late-March, 84% of the survey respondents identified a potential global recession as a top-three concern, indicating a need for clear-eyed planning for a company’s position and investments as the world comes out of this crisis.
• The survey also shares that cost containment is the top financial action companies are considering now. Experience from prior black swans and market crashes shows that hardly anyone regrets acting decisively on costs. But as research also shows, across-the-board cost cutting may not be a good solution to help companies recover or emerge stronger after a crisis. 

In this publication, we take a closer look at these two areas to help companies address their short to medium-term challenges. They include: forecasting in the face of uncertainty to better plan and adapt to the changing environment, and exploring approaches to rethink cost management.

In the longer-term, while businesses must continue to manage costs, they will need to build capabilities especially in the post COVID-19 environment, where it’s not going to be business as usual. Companies have to keep in mind the holistic longer term view of business in building and investing in differentiated capabilities. Look out for our viewpoints in future publications around adapting to COVID-19. 

Armed with such tools, businesses will be able to plan and take necessary action post MCO to be fit for growth.

^{1 Malaysiakini, Covid-19 in Malaysia, 2020}

^{2 PwC’s COVID-19 CFO Pulse survey, 2020}