The Annual Budget No Longer Works: How Businesses Survive in an Era of Volatility
Currently, there is continued instability in the global economy. Fluctuating currencies, supply chain disruptions and frequently changing interest rates by central banks have led to a situation in which traditional finance planning techniques are no longer applicable for the current environment. As such, the Head of Finance has had to assume a broader role than simply reporting and controlling finances; the function has evolved into a strategic role focused on creating sustainable resilience for the business in the long term.
Oksana Malysheva is a finance professional with 18 years of experience working with foreign companies. She provides insight into how international businesses can remain stable, maintain their investment appeal, and manage risks through financial decision-making in a volatile global economy.
From Static Budgets to Agile Financial Management
Malysheva says that international business dynamic changes can't be appropriately represented anymore using traditional 12-month annual budgets. Companies that operate across a number of different jurisdictions with different amounts of inflation, tax regimes and currency restrictions often find that their budgets no longer accurately reflect their business needs or performance.
“Today, a budget is not a fixed figure but a range of possible scenarios. A financial leader must be able to revise forecasts quickly as external conditions change, in order to preserve operational control and profitability,” the expert notes.
This has resulted in the need to implement rolling forecasts and scenario-based forecasting in practice. Malysheva's methods allow for companies to analyze how external variables will affect liquidity and cash flows based on various hypothetical circumstances - in other words, if key macroeconomic measures were to change by 10-30%. These types of tools will allow businesses to make proactive rather than reactive decisions.
Cross-Border Risk And Cash Flow Management
Cross-border financial transactions are a critical area of risk for businesses involved in international trade. Risks exist as a result of currency fluctuation, changes in government regulation, capital controls and poor compliance with differing jurisdictions.
In order to mitigate risk, Malysheva believes that companies should have a centralized treasury management system allowing for the central monitoring of cash flows from one place by one analysis. A centralized treasury will reduce operational risk, create more transparency and allow for greater efficiency in the management of liquidity across an entire corporate group.
"A multinational company must balance local rule compliance with its overarching holding company strategy. If there is any mistake in complying with these rules internationally, it may affect far more than just that one district or project," says Malysheva.
Data and Analytics as the Foundation of Decision-Making
The criticality of decision making speed when working in an environment that is unstable is high. The modern finance function, according to Malysheva should be the centre of analytical expertise and not just another reporting unit.
“Finance no longer describes the past-it shapes the foundation for future decisions. Accurate interpretation of data helps businesses communicate with investors and partners in a clear and transparent way, even during periods of crisis,” she says.
As per previous examples, companies that invest in financial analytics and operate using international standards such as IFRS find it easier to adapt to changes within their environment as well as maintain trust with global stakeholders. This is especially true for businesses with foreign capital and businesses governed under an international governance structure.
Implications for International Business and the Economy
The financial management techniques proposed by Oksana Malysheva can be utilized by all types of international organizations, not just individual firms. These techniques will help increase financial transparency, minimize systemic risk, and increase business resilience in all jurisdictions around the world in times of global instability.
Effective financial management will not only help create stability for the corporation but will also contribute to broader economic stability across all industries that involve multiple countries and have high levels of investment.
The Role of the Financial Executive in the Current Environment
Global volatility is now the norm rather than a transient state; therefore, a company’s sustainability is directly related to how well financial managers execute their jobs and how well they support their strategic decisions with accurate data.
The work experience of Oksana Malysheva clearly illustrates how an organization can use structured frameworks, analytical reasoning, and a thorough comprehension of international complexities to adapt to crises and to capitalize on them for business expansion. This type of management supports long-term sustainability and creates a stronger competitive position for the organization within the global marketplace.
