Balance action and restraint in tough times

Business accounting management consultant AMS (www.amsolutions.net) is advising its clients to balance action with the need for restraint in responding to the current crisis that is roiling financial markets. Here are some good ideas from AMS on how to do this:

Step up monitoring of receivables. Cash will be king in tight economic times. You want to be sure that customers are paying according to their agreements with you.

Reassess revenues. Often, 20% of customers can generate 80% of your revenue. Update your revenue profile to determine who is driving most of your revenues today. Then, check in with those customers to learn how the crisis may affect their ability to continue to be customers.

Develop contingency plans. The time to think about what to do under different scenarios is now. For example: How do you alter operations if revenues drop by 10%, 15%, 20%? What investments in the business are absolutely vital to continue?

Communicate with all stakeholders. Tell clients if you expect to change the way you deliver your services. Let suppliers know if you need to slow down your regular orders—and reassure them of your ability to pay so they will work closely with you. Keep investors fully apprised of any material change in operations and what those changes could mean for them. Above all, don’t neglect your employees; they will continue to be your most valuable resource in responding to change.

Don’t overreact. If you have put in place accounting and financial management systems that deliver timely and accurate information, make sure all the process flows are working. If you aren’t getting the information you need to make decisions, you’ll need to make adjustments.

Bruce