Sri Lanka’s economic crisis of 2022 forced finance teams to make decisions under conditions in which cash, currency, costs and business continuity could change rapidly, demonstrating the importance of having strong financial controls in place before things go wrong.
For Darshana Gunasekera FCCA, group finance director and board member at Dilmah/MJF Group, the crisis largely validated principles that were already part of the business’s operating model. ‘Perhaps the biggest lesson was also the strongest validation of our long-held philosophy: you cannot prepare for a crisis once it has arrived,’ he says. ‘Resilience is built over many years, in stable conditions, and it has to become part of an organisation’s DNA rather than sit in a contingency plan.’
‘The most important lesson was that liquidity is the foundation of resilience’
That approach rests on prudent leverage, disciplined capital allocation, adequate liquidity and long-term investment. Dilmah’s business model also provides a natural foreign-exchange hedge, as more than 90% of production is exported and more than 80% of its value addition is local, allowing foreign currency earnings to offset foreign currency obligations.
No substitute for financing
Supplier credit, Gunasekera says, must also be viewed as part of working capital management instead of a substitute for financing. In difficult conditions, protecting the resilience of the supply chain can be as important as protecting the balance sheet.
At Softlogic Life Insurance, the crisis sharpened attention on liquidity and cashflow. ‘The most important lesson was that liquidity is the foundation of resilience,’ says CFO Nuwan Withanage ACCA. For a life insurer, that meant maintaining strong liquidity, dynamic cashflow forecasting and disciplined asset-liability management amid market volatility.
‘Financial resilience is not built during a crisis; it has to be built before’
The company also treated cost control as an efficiency exercise; non-essential expenditure was streamlined, while investment continued in digital transformation, automation and customer experience. Currency volatility also increased the need for scenario planning and active treasury management, particularly for imported medical services and technology.
Erandi Wickramaarachchi ACCA, group CFO of CIC Holdings, also places liquidity at the top of the finance agenda. ‘The Sri Lankan economic crisis taught us that financial resilience is not built during a crisis,’ she says. ‘It has to be built before one.’ This meant managing liquidity, foreign exchange, costs and supplier relationships as an integrated discipline.
Rapid movements in inflation, interest rates, energy and logistics costs required more frequent reviews of budgets and spending. The objective, Wickramaarachchi says, was not simply to reduce expenditure but to distinguish essential from discretionary spending, eliminate inefficiency and use group synergies without allowing cost controls to obstruct strategic decisions.
Visibility becomes permanent
Practices that intensified during the crisis have now become a practice of normal financial management.
Gunasekera rejects the idea that cashflow visibility, scenario planning, debt discipline, pricing governance and robust reporting are temporary measures. ‘These are not crisis-era practices; they are the fundamentals of good financial management,’ he says.
What has changed at Dilmah is the way those disciplines were applied. Scenario planning has been strengthened around clearly defined triggers, financial visibility became more frequent, and decision-making became more objective and data-driven. It has also institutionalised finance and business process improvements identified during the period.
‘In many ways, the crisis accelerated our transformation’
Softlogic Life, meanwhile, has made rolling cashflow forecasts, scenario planning and enhanced liquidity monitoring part of its operating model. Major investments and strategic decisions are assessed under multiple economic scenarios, while stronger use of digital dashboards and analytics has improved visibility across operations.
The crisis also pushed finance deeper into commercial decision-making. Withanage says that the function has moved beyond primarily reporting results to acting as a strategic business partner, balancing risk, growth and capital efficiency.
‘In many ways, the crisis accelerated our transformation,’ he says. ‘The practices we adopted out of necessity have now become a competitive advantage and continue to support Softlogic Life’s sustainable growth and regional expansion.’
For CIC, Wickramaarachchi points out, stronger cash visibility, working capital discipline and closer customer relationships have become key to protecting liquidity. The group has also strengthened attention to foreign exchange risk by matching currency inflows and outflows where possible, maintaining earlier visibility of import requirements and reducing over-reliance on a single currency, supplier or funding source.
Supplier relationships emerged as another important source of resilience. CIC’s experience has reinforced that supplier credit depends on credibility, transparency and long-term relationships, particularly in a market where counterparties may already perceive elevated country risk.
Caution without retreat
As conditions stabilise, none of the three CFOs argues for a return to aggressive growth at the expense of resilience – but neither do they see financial caution as a reason to stop investing.
Gunasekera is of the view that disciplined financial stewardship changes the quality of the investment discussion. Disruption can also create opportunities to strengthen brands, expand into markets, develop talent and build competitive advantage, provided those investments do not threaten continuity.
‘Prudence is what earns you the right to be ambitious’
‘Ambition and prudence are not opposing forces,’ he says. ‘Prudence is what earns you the right to be ambitious.’
Softlogic Life is continuing to protect liquidity and apply disciplined capital allocation while investing in digital transformation, customer experience, product innovation and regional expansion. Its expansion into Bangladesh is cited as an example of using crisis-built financial resilience to support strategic growth.
‘Financial discipline should never be viewed as a brake on growth,’ Withanage says. ‘When combined with strategic vision, it becomes the engine that enables sustainable growth.’
CIC is also balancing caution with investment in operational efficiency, technology, innovation, supply-chain resilience and market expansion. Each investment is assessed for strategic relevance, expected returns, cashflow impact and risk.
‘Financial caution, in our view, should not mean avoiding investment altogether; rather, it means ensuring that capital is allocated carefully to initiatives that create sustainable value,’ Wickramaarachchi says.
The crisis may have eased, but the finance practices it reinforced have not. Across many Sri Lankan corporates, the emphasis is now on preserving the resilience built under pressure while using it to make better choices about growth.
