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How to Recession-Proof Business Finances


Recessions can have a major impact on companies of all sizes. Luckily, there are ways to recession-proof businesses to keep them afloat through the worst financial storms.
Many experts are predicting that the economy will take a turn for the worse in the next few years. We can’t know for sure what will happen, but preparation can stave off anxiety and help companies stay healthy during uncertainty and financial volatility.

CEOs can take actionable steps ahead of a recession to prepare their companies and employees for a downturn. One of the best ways to recession-proof a business is to ensure the company has a solid financial foundation. This means having a strong budget and good financial practices in place. 
To complement that effort, companies should be mindful of spending. During a recession, people tend to cut back on the money flowing out of the business so they can use excess cash as a cushion. It’s important to adjust your budget accordingly and make sure there’s enough cash on-hand to weather cyclical downturns. 
Companies can take many preventable steps before things turn sour to recession-proof business finances. However, it’s also vitally important to have a plan in place for how to cope with a recession in real time when/if one does arrive. This could mean:

  • Having a contingency fund set aside
  • Knowing what cost-cutting measures you’ll immediately enact
  • Being prepared to execute an emergency plan with rearranged priorities 

In this article, we’ll provide specific initiatives business leaders can take to prepare for an economic downturn and navigate the financial turbulence.


How to Recession-Proof Business Finances

As CEO, achieving a recession-proof business should be among your top priorities. Follow these action steps to insulate yourself from the impending impact.
Improve Cash FlowOne of the best ways to recession-proof your business is to increase cash flow. Cash flow is the lifeblood of any business, and making sure you have a healthy stream of money flowing into the organization is key to weathering unexpected problems. 
>Cash flow is the movement of money in and out of a business. By tracking it, CEOs will obtain critical insights about a business’s state of finances and be able to clearly identify the steps needed to keep operations healthy in the event of a recession. 
There are a few different ways to improve your cash flow. One is to offer discounts for early payments. This can incentivize customers to pay sooner, which will help you bring in cash faster. Another is to extend payment terms to your suppliers. This gives you more time to generate revenue before you have to pay them back:
Try these efforts to improve cash flow:

  • Stay on top of bookkeeping to make sure data is up-to-date
  • Prepare and stick to a budget
  • Look for ways to generate cash from existing assets
  • Offer incentives and discounts for early payments
  • Extend payment terms to supplier

Reduce Expenses

Another way to recession-proof business finances is to take steps to reduce expenses.

Cutting down on the money flowing out of the organization while simultaneously finding ways to boost cash flow will provide companies with a much-needed financial cushion.

Try Reducing Spending By:

Reviewing your budget regularly and looking for cost-cutting opportunities
Adopting financial technology that make your business more efficient
Switching some roles to as-needed to reduce payroll costs

By hiring outsourced Accountants, CFOs and Controllers, small and medium-sized businesses can receive help from experienced financial professionals at a fraction of the cost of hiring them full time. These experts can be plugged into specific tasks and offer advice on how to best recession-proof business finances.

Monitor and Reevaluate KPIs

As important as it is to tighten your belt during tough times, it’s also important to keep an eye on the long game. For many companies, that means reevaluating company priorities and KPIs so that attention is focused on the areas of business with the most potential through the recession and into the future.

CEOs have to make tough decisions about where to allocate resources when faced with headwinds. If they’re not clear about their priorities and KPIs, they could end up making knee-jerk decisions that don’t make long-term sense for the business. Instead, drive hardest at business initiatives most likely to succeed and generate the highest ROI.

The A Team Can Help Recession-Proof Your Business

If a recession begins to take hold, don’t be afraid to ask for help from a financial consultant or Accountant. They can take a closer look at your finances and make sure you’re on solid footing going into an economic downturn.

The A Team’s selection of savvy financial professionals can review your financials and help you identify and execute ways to improve cash flow, cut costs, and take other preventative measures to keep your business surviving and thriving.

Contact us for a free consultation to begin recession-proofing your business.


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