COVID-19: impact on the CFO office in Belgium – nonprofits
The coronavirus pandemic has disrupted businesses around the world on an unprecedented scale. How did delaware customers cope with the immediate challenges during the lockdown, and how do they plan to advance in the months and years to come? We asked their CFOs and documented their stories in a new series of CFO Connect blog posts.
In this double interview, Cath Meulemans and Karolien Geudens, financial managers of Zorgbedrijf Antwerpen and Red Cross Flanders, respectively, discuss the impact of COVID-19 on the nonprofit sector.
Both Red Cross Flanders and Zorgbedrijf Antwerpen offer a broad range of care services. While the activities of the Red Cross go from their well-known blood collection and first-aid services to blood and plasma research, asylum seekers support and organizing holidays for people with disabilities, Zorgbedrijf Antwerpen operates 18 nursing homes, 3,350 service flats, 44 service centers and 7 youth care centers, among other activities. “As we’re active in so many fields that are closely related to vulnerable people and healthcare, the COVID-19 pandemic completely reshuffled our day-to-day operations,” agree Cath Meulemans and Karolien Geudens.
Reshuffling all our activities
Nursing homes have been in the news nearly every day for the past few months. How did Zorgbedrijf Antwerpen react when the coronavirus broke out?
Meulemans: “Our residents are at high risk, so we had already taken precautions before the actual lockdown: we had banned all visits and purchased personal protective equipment (PPE). When the authorities actually imposed the lockdown, we also had to close our restaurants and stop our shuttle services, which are both popular among the residents of our service flats. As our mission is to take care of our people, we decided to set up meal and grocery delivery services instead. That was quite an undertaking, but we were highly successful. The employees who used to drive our residents around town started delivering meals and groceries and brought protective gear from our central facilities to all the nursing homes.”
Picture: Cath Meulemans, financial manager of Zorgbedrijf Antwerpen
What about Red Cross Flanders, how did the COVID-19 outbreak impact your operational activities?
Geudens: “Some activities came to a complete standstill, including our training courses, our first-aid services for big events and event halls like Sportpaleis, and our hotel activities in Zuienkerke. Even our blood collection service was much less needed: as non-essential surgery was prohibited, demand dropped by over 50%. On the other hand, other activities boomed: our ambulances transported over 3,000 COVID-19 patients, over 9,000 volunteers supported staff in nursing homes, our laboratories tested samples of possible COVID-19 patients and we started collecting the plasma of recovered patients for trials. In addition, we help Sciensano test blood samples to detect antibodies.”
Impressed about workforce flexibility and resilience
Did this lead to a lot of changes to your workforce planning?
Geudens: “Red Cross Flanders employs 1,400 people in addition to over 13,000 volunteers. We were really happy to keep most of the staff on our payroll active throughout the crisis. Our office workers had already started working remotely before the lockdown, as we absolutely wanted to protect them from the virus. Many employees, like the people in our laboratories and in our 13 blood donation centers, had to work even harder than before. We did have to put a number of employees who worked in our hotel and first-aid training courses on temporary unemployment, yet very soon they were able to get back to work and help with the crisis volunteers – thanks to the flexibility of some of our employees.”
Geudens: “That struck me as well. While Red Cross Flanders is used to provide disaster relief, etc., this pandemic is exceptional and the efforts of some people have been – and still are – amazing. For example, on Friday 10 April, the board decided that we’d start collecting the blood plasma of recovered COVID-19 patients, and by Monday 12 April, our IT team had already set up a website where possible donors could register.”
Picture: Karolien Geudens, financial manager of Red Cross Flanders
Major financial impact
How big is the financial impact of all these changes?
Geudens: “Really big. As opposed to what most people may think, these are not only tough times for the private sector – we also experienced substantial declines in income and had to completely suspend some operations. That impacted our revenues, while fixed costs remained. The boom in ambulance services and COVID-19 tests cannot compensate for that loss. We had to, for example, completely reorganize our laboratory activities to test COVID-19 samples and to help Sciensano. Apart from financial losses incurred by our central organization our local groups are facing a major cashflow problem, as they can’t deliver first-aid services at events until 31 August and the well-known sticker campaign only yielded 805.000 euros instead of last year’s 3.5 million euros. Thanks to the press coverage, we have received quite a bit of donations to compensate for that loss, but it will not be enough.”
Meulemans: “The COVID-19 outbreak has significantly impacted our finances too: to date, the crisis has cost us around 2 to 3 million euros. While our revenues have shrunk because we can’t admit new residents, the cost of absenteeism in the first few weeks and the protective gear, among other things, is huge. Even more, we decided to accelerate a series of investments in digitization. The residents of our services flats now use badges instead of keys to access their homes – which is more corona-proof. Fortunately, our cashflow is acceptable. That helps us weather this storm.”
What are your main responsibilities as a finance manager during this crisis?
Meulemans: “Twice a day, the members of the crisis team discuss how to approach the rapidly changing regulations. This get-together helps us swiftly change course, if needed, to respond to new insights or new decisions from authorities. We decided, for example, to purchase all the PPE centrally and distribute it to our centers to avoid each center hoarding equipment and supplies. We also changed our approach to invoicing: residents of our service flats now get a single invoice per month that bundles all their costs. Decisions like these help us protect our cashflow.”
Geudens: “We hold short management team meetings every day, mainly to discuss operational topics. Financials are reviewed during the management committee meeting. The many simulations and best- and worst-case scenarios that we made, help us understand the potential impact of the crisis on our cashflow, budgets and financial model. They serve as a starting point for prioritizing and revalidating our investment decisions.”
Meulemans: “We also looked for ways to cut costs and defer expenses. We had planned to invest in more real estate but have since put that investment on hold. On the other hand, we attach great importance to ensuring continuity, hence our continued investments in digitization.”
The importance of complete reporting and of forecasting
Is the need for digitization one of the lessons you learned from this crisis?
Meulemans: “We learned many different things, which will definitely help us moving forward – and prepare for a possible second wave of COVID-19. But indeed, once again, we have experienced the benefits of far-reaching digitization. This crisis clearly demonstrated that the use of timely, accurate and complete reporting is key to being prepared for what lies ahead. Thanks to the efforts of delaware, for example, we managed to collect all COVID-19-related costs in our SAP S/4HANA system during the crisis, which helps us keeping an overview as a solid basis for decision-making. The mission of Zorgbedrijf Antwerpen is to provide high-quality care. If we want to constantly improve our services without a big back office system, we have to invest in technology. SAP S/4HANA has helped us optimize our operational processes for a while now, we have streamlined our master data as a basis for BI and we plan to introduce more automation with robotics – definitely also for finance.”
Geudens: “Red Cross relies on Microsoft Dynamics 365 to streamline and digitize its finance and purchasing operations. For now, w mainly used Excel for simulations and forecasting, but we hope to shift up a gear in this field in the near future. In the past, I made forecasts twice a year. Now, we understand how important simulations and forecasts are to maintaining control. Apart from that, the pandemic hit in the middle of our year-end closing. This is traditionally a very complex task, as we have to consolidate the financial statements of our central services with those of 241 regional volunteer teams.”
Has the coronavirus crisis shed new light on your role as a finance manager?
Geudens: “More than ever, I felt like the finance team partner to the board by bringing a proactive perspective to finance management. In the nonprofit sector, this may be even more important than in other organizations. It’s a major misunderstanding that the finance role in nonprofit organizations is simpler or easier. I was controller at a large media company in the past, and I must say that the financials of Red Cross Flanders, with its mix of staff and volunteers and complex revenue sources, are even more complex to manage.”
Meulemans: “I couldn’t agree more.”
Zorgbedrijf Antwerpen in numbers (2020)
- Activities: services for elderly people and families with young children, and care support for families
- Founded: 2009
- Head office: Antwerpen
- Employees: 4,350
- Activities: blood collection, first aid, emergency services, etc.
- Founded: 1864 (Red Cross Belgium)
- Head office: Mechelen
- Employees: 1,400 (+13,000 volunteers)