How Financial Planning And Forecasting Software Helps You Make The Right Decisions In A Recession
The aftermath of the Covid-19 pandemic, the war in Eastern Europe, and the cost-of-living crisis have created a potent combination of challenges for UK businesses – although how severely these factors play out is a matter of conjecture. The UK economy is still currently growing, but a recession is widely predicted over the coming 12 months, with unstable conditions for at least two years.
Recessions are rarely universal across all sectors of the economy and there is still scope for growth. However, economic uncertainty – and a high cost for commercial borrowing – makes it essential that businesses have the data and reporting facilities available to make responsive and intelligent decisions about their resources.
In this article, we examine how financial planning and forecasting software, such as Corporate Planner, can help your business make better decisions during a recession.
For business leaders, a recession often presents difficult or intractable decisions. Forecasting the depth or impact of a recession is difficult for economists because predicting business cycles isn’t straightforward – and economic news channels are dominated by predictions of doom written by journalists with little to no economic experience. The number of genuine recessions is far outweighed by those that were predicted but never came to pass.
However, to survive a downturn or period of instability unscathed, or even to grow during a recession, companies must have the agility to adjust their business model to adapt to the new environment.
This means being flexible in their approach and, by embracing change, being less rigid – ‘But we have always done it this way’ does not hold the same weight when sales are plummeting, and lenders are withdrawing credit facilities.
Efficiency savings are also key, for example, by reshaping the business structure or streamlining business processes. By cutting unnecessary expenditures, businesses can insulate themselves against the worst effects of the recession and protect vulnerable profits. However, a recession does not mean that businesses should stop spending or even stop borrowing, rather that each investment is carefully weighed against the benefits to the business and the cost of borrowing and risk factored into the predicted ROI.
Targeted investments in new software and staff can often save businesses money and boost their margins during a recession, or increase profits by raising productivity. When companies across the company are busy raising prices, a business that can keep costs low through efficient planning, and responsive forecasting will have a competitive advantage.
So, what steps can business leaders take to minimise the impact of a recession?
The Importance Of Financial Planning And Analysis Software
Dedicated financial planning and analysis software, such as Corporate Planner, not only simplifies the forecasting process but also offers many vital tools that will give business leaders greater control of their finances and enable them to make more accurate, data-based forecasts.
With financial planning and analysis software, you can:
In summary, investing in financial planning and analysis software enables you to:
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