data warehousing can be beneficial as it helps CFOs keep their finger on the pulse of customers and supply chains as well as see gaps for compromise. CONSTRUCT TIERED FORECASTS THAT INCLUDE STRATEGIC COST-CUTTING MEASURES In the event of an economic downturn, cost reductions are a common response. However, a simple yet effective approach is compiling tiered forecasts representing cuts that correspond with different levels of revenue reductions. For example, in a drawn-out recession, the focus needs to be on reducing operating expenses and fixing long-term solutions to preserve your cash runway beyond six months. Wise CFOs will keep a variety of expenditure plans in their back pockets that are in line with predicted economic conditions and their own cash flow realities. CONDUCT CUSTOMER AND SUPPLIER ANALYSES ON A ROUTINE BASIS Although no company is entirely immune to economic downturns, certain industries and business models have demonstrated resilience and high performance even when other companies struggle to survive. These are where the most astute CFOs take lessons from. Consider how customer demand and supply availability might change if the economy slows. Are you certain of your product’s extravagances versus necessities? Modelling likely buyer behaviour will provide insights into how you might adjust production. It all goes back to conserving a holistic view across the spectrum of the business. Enterprise Resource Planning (ERP) technology can generate data to model customer spending. This information can inform which customers are at higher risk and how much they affect revenue, so CFOs can then adjust rates and perform outreach accordingly. At the same time, CFOs should closely monitor supply chain risks upstream and downstream. Map out all suppliers and partners and make a list of risk factors such as credit history or financial dependence associated with each one. Next, identify where the company would benefit most from diversification. Here, ERP can function as a central record and improve accessibility to relevant information. KEY TAKEAWAYS Regardless of economic conditions, effective leaders take a comprehensive approach to assessing their business to ensure optimal efficiency. To stay ahead of the curve, CFOs should leverage contextualised insights to model potential scenarios such as new sales, upselling and cross-selling to existing customers, business renewals, and inventory management. Additionally, make the most of automation technology to free up employee time for high-value strategic tasks. CFOs should use this opportunity to reassess their business technology and processes, ensuring they are positioned to thrive in a rapidly changing economic landscape. By proactively preparing for potential challenges, CFOs can steer their businesses to come out even stronger on the other side. By proactively preparing for potential challenges, CFOs can steer their businesses to come out even stronger on the other side. Finance Monthly. Business 29
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