When it comes to business finances, the last decade hasn’t been an easy one for companies. The financial crisis that struck around the world, the consequent recessions and the downturn in economic activity have made the years since 2008 a trial. But whether the economic crisis is attributed to overvalued assets, terrorist activities, poor debt management, or regulatory failures, says Floyd Norris in the New York Times, it doesn’t necessarily spell the end.
While some financial problems can be predicted while others are almost totally unforeseen, there are some steps companies can take to avoid potential problems and to manage any that do crop up. Overcoming financial challenges in the business world is undoubtedly difficult, but with a level head, a realistic sense of cash flow and a strategic plan in place companies can weather the times and emerge stronger and more capable of handling future challenges. Here are three ways companies can take to kickstart their finances.
Image Source: Pixabay
Establish Communication & Cost Reduction Plans
Keeping a company above water when a crisis hits requires both action from within and in the public eye. While divulging a company’s full financial state isn’t necessary or advisable, assigning a spokesperson to handle the media and speak with investors, customers, and vendors is a good way to keep the calm in the event of an impending storm. Well-informed investors are more likely to trust that the company is doing everything to handle the problem than investors who rely on hearsay from internet news forums and social networks.
With the public opinion in hand, the internal steps can be taken to correct the problem. Having a plan in place for where costs can be cut before there’s a cash shortage in place, whether it’s freezing disbursements or revising payments with creditors, is essential. There is a lag between enacting a plan and the impact on cash flow, so it’s crucial to plan ahead. Having a strategy fully formed and in place and knowing the priorities will allow the plan to be put into effect immediately and reap the results, rather than suffering through the downtown while still struggling to come up with an adequate response.
Adopt the Use of Convergent Rating & Billing
Consolidation is a great way to reduce costs by managing resources more effectively, says CSG International. In light of this, many companies choose to incorporate convergent billing into their financial planning. This tool is essentially the integration of all service charging onto a single customer invoice. Though the process can be challenging and calls for the application of real-time, multi-service package pricing and cross-services discounts, there are many tools available to help companies adopt such a single service platform.
Convergent rating and billing software systems take the complexity out of the transaction and offer a flexible, scalable billing platform capable of handling multiple services in industries not just on the local level, but in global markets as well. In the long run, adopting a convergent billing system offers companies the ability to rate, discount, create bills, and protect themselves against error and fraud. It’s an overall cut in the financial resources needed to managing billing.
Offer Markdowns on Products
While markdowns aren’t usually something that make executives smile and the word is often used in association with margin degradation and a downturn in profits, they are used quite often to rid companies of old product and make way for the new. However, markdowns can also have a positive effect in attracting sales, not just shifting surplus stock or discontinued products. Consumers are increasingly demanding price transparency from companies, and under the threat of inflation as many as 48 percent of businesses have begun incorporating markdowns as a regular rolling process, according to a study by Retail Systems Research.