No matter the state of the economy, it is essential to be diligent about contracts and payment terms. It is natural that when money is tight, payments will be delayed. As tempting as it is to give in to a sales team that wants to loosen contract terms to close a deal, don’t do it, as this will hurt the business should cash get tight. Good contracts create healthy business relationships with clear expectations. Also consider supplier relationships. If terms are not being met, consider other sources of supply to build a larger network of options.
Invest in Accurate Forecasting
Rely on your internal finance team to analyze current inventory data and project earnings. It’s essential to get a clear picture of inventory. Explore your inventory system, using management software to forecast sales and improve stocks.
Create a Contingency Plan
Look at not only profit and loss records, but balance sheets and use this information to create a “Plan B” if a recession were to take place. Consider how long the supply chain could operate without new revenue. Eliminate any capital spending that could be delayed. Switch to generic parts instead of expensive custom raw materials, as it’s easier to cancel orders with standard parts that suppliers can resell more easily. Look at how customer credit and back invoices are handled, as well as how the company will handle anticipated new expenses.
Participate in Workforce Planning
Work with the HR team to study current personnel to eliminate the need for layoffs, reviewing job descriptions to see if tasks can be more evenly distributed throughout the team. Consider the people you cannot afford to lose, create retention plans should they not already exist, and brainstorm ways to keep morale high should the need arise to make changes to workflows.
It is critical to ensure operations are always running as efficiently as possible. A best-in-class supply chain management solution can show gaps in productivity and help manage sales, inventory and workflows no matter what is happening with the global economy. Use this data to pinpoint areas that could be improved upon.