Leadership

How Accounting Departments Can Help Their Businesses Prepare for an Economic Slowdown

Shivang Patel is FloQast’s Director, Sales Engineering. Having spent several years in audit at Armanino and, later, Ruckus Wireless, Shivang joined FloQast early in the company’s existence, rising from Account Executive to his current directorial role.

According to ADP, the private sector added 155,000 jobs in September. Unemployment remains low at 3.7%. The economy is roaring according to most indicators, but a level of uncertainty remains.

Most of us were around in 2007 when the Great Recession took hold for over 18 months of sheer hell. As accountants, we are usually the most skeptical folks on the team. Our job is to live in the past. We analyze the historical data and are the last to forget about the difficult financial times when we were likely the ones presenting the doom and gloom financial forecasts. Also, as overhead, we fear we will be the first to go when revenue declines.

Combining our role in the company and our unique viewpoint, we have the ability to help our company plan for a looming economic downturn. How are you helping your company prepare for the inevitable? Here are some ideas to get the creative juices flowing.

Upgrade Software Systems

It might sound like a bit of a lay-up, investing in the right software solutions can make or break an accounting department. Whether it was the lack of bandwidth to dedicate to researching the right systems or just you putting off an available upgrade, software is always improving to increase efficiencies and given accounting’s role within the organization, added efficiencies can go beyond simply getting the books closed earlier than expected. The investment is an easier sell to your management team when economic times are good, when funds are more readily available to ensure resources are available for the conversion itself.

Check Your A/R Aging

Be aggressive at collecting old receivables — you will be the last person who gets paid if a downturn hits your customers. Make sure you have documented collection processes and review them for efficiency and compliance. If you are not offering electronic invoicing and payment options, you should be. Reminders are sent automatically — the squeaky wheel gets the grease. Even hospitals are texting bills now with a link to pay.

Check for Extra Capacity

Do you or your team have extra capacity? If so, make yourself more valuable to the company by doing more than just counting the beans. Start a project to track financial ratios, implement key performance indicators, create a dashboard, perform analysis on the profitability of product or service lines. Don’t have extra capacity? Well…

Look for Efficiency Improvements

We already talked about automation and upgrading your current software programs, but are there other areas where you can increase efficiency to free up time to provide more value to the company? One place to look is in records management. Are you duplicating filing tasks by maintaining paper records? Can you move a manual paper approval process to an electronic workflow with electronic signatures? Is there an online bill-paying option that will not only reduce staff costs but tighten up your internal controls? Can receipts be scanned and attached to the transactions by the person making the purchases?

Invest in Automation

Late last year, the Wall Street Journal published an article detailing shoemaker Asics has relied on Excel spreadsheets to manage its treasury function until recently. With annual sales of over ¥400B and operating more than 400 bank accounts with 30 banks, that just seems crazy! Perhaps there is a software that will allow you to utilize Excel for its strengths, but eliminate repetitive responsibilities that cost accountants valuable time.

Take some time this week to think through these ideas and set some goals for yourself. The best thing about considering ways to help your business in an economic downturn is that there is no downside to making improvements if the downturn never comes.

Shivang Patel

Shivang Patel is the Senior Director, Growth Markets at FloQast. Prior to joining the team in 2015, Shivang was an accounting manager and early FloQast user before making the leap and starting as an account executive at FloQast. Since then, Shivang has launched and scaled FloQast's Sales Engineering team before taking on his current role in early 2022.