While the “experts” debate whether or not we’re in a recession, it’s more likely you’re asking yourself: “Is my company at risk?” There’s no short answer — it depends a lot on your industry, region of the country, how strong your internal procedures are — and what upper management is doing to respond to the current economy.

But there are a few things you can watch to take the pulse of the company. 

The following are common problems that often crop up during tough times — even for companies that are in a position to ride things out. If you catch them early, and are prepared to deal with them, you can help your company stay healthy until things turn around.

• Cutting costs — for the wrong reason. When business is bad, it’s a natural reaction to start slashing costs wherever possible. (”Maybe we can skip attending that conference this year …”) No doubt, that’ll save you some dough in the short-term. But a better plan is to look for more permanent savings. Savings that come from permanent changes, such as making processes more streamlined, reducing redundancies etc., may not look as earth-shattering, but they’ll give you a much bigger long-term boost.
• Customer short-pays. The best way way to deal with this kind of cash crunch is to stay ahead of it. If you have customers that you suspect are more prone to have cash problems, address it with management as soon as possible. Early steps like modifying contract terms, finding more affordable options, etc. can give longtime customers the breathing room they need to keep paying their bills — and without having to hamper an otherwise fruitful relationship.
• Cash & credit crunches. If there’s a chance you’ll have to stretch a payment to a vendor because of cash shortfalls or financing falling through, your best bet is to give ‘em a heads-up early. Will they be thrilled? No. But keeping the lines of communication open signals that you’re doing your best. A surprise non-payment is going to sour things a lot faster.
• Inventory pile-ups. It’s not unheard of for sales to drop off faster than purchasers can modify buying habits to reflect the new (decreased) demand for supplies and equipment. Accounting can play a key role in reporting numbers back to purchasing departments so they can react more nimbly in the face of a slowdown.

How is your department planning to ride out the economic storm? Share your stories in the comments below.

Tags: Best practices, Cost cutting, Recession