7 Easy Steps of Crisis Management Planning in 2020

October 3, 2020by Shalaka Joshi0

One of the most important roles that an accounts management team plays is managing crises.

First, let us understand what crisis management is?

Crisis Management is the process that involves the identification of threats to an organization and the methods used by the organization to deal with such threats.

Most of the businesses fail due to a cash shortage. The money invested and expended is more than what’s the working capital.

So, how do you start with crisis management planning? As well as what can be done if such an event occurs?

Let us explore the various options available to deal with any type of crisis management.

1. Start job costing

Start noting down the cost that each leg of the company brings up; marketing, payrolls, asset costs, products, and other services.

Put these costs against profit margins, and you will see the deficit. You will get a clear picture to work with.

You will see the profitable services differentiated from the non-profitable ones.

2. Expedite your receivables process

Determine the accounts that can be pushed to pay early. You need to be very careful about which accounts you are asking for early receivables.

Tap into the most promising accounts first, and while establishing new partnerships, ask for early part payment.

3. Look at possible borrowing options

You can be considering credit options and borrowing from legit financial organizations.

Be mindful enough to understand the interest rates and other things that can affect and hamper your business.

Before you take business loans, know that if your company has a cash flow problem at the primary level, the loan works only as a temporary relief.    

4. Negotiate on your payables

Negotiating on your payables with your vendors can be a significant relief on your working capital. Be honest with your vendors about your paying capacity.

If you can push for part-payments, or a complete waive of even a penny, nothing like it. Remember to never negotiate to a point where you will be heavily indebted.

That would be the last thing you need during a crisis.

5. Eliminate expenses

When in a cash flow crisis, prioritize your company’s expenses.

Eliminate every cost and pay only the cost that keeps your business operational and keeps you running.

Keeping an eye on every penny that you spend is an excellent filter to sort out expenses, but more importantly, doing so during a crisis is helpful.

6. Manage non-essential assets

Remember that any asset that’s not required at present, or during a crisis, is a liability.

Sort your assets out and check for any asset that’s adding more cost than revenue. You could always do an audit of every asset that keeps your company moving.

Removing or selling off any asset that doesn’t help only relieve your business account.  

7. Hire an outsourcing agency

One of the ways to be prepared is to hire an outsourcing accounts management team. A dedicated team that looks over your account books and balance sheets has preventive measures set up and has a plan B for a crisis.

An accounts management outsourcing team keeps track of your company’s financial records, forecasts cash flow shortages and raises, and keeps on hand methods and steps to take during a crisis.

The accounting outsourcing companies come with an added advantage of cost flexibility against the fixed cost of in-house resources.

To summarise

Always keep a check on your company’s accounts management and always have a backup plan ready. 

Keep your borrowing options open and immediately start job costing once you detect a cash shortage. Cutting down on expenses, trying to early receivables can all help in keeping your business running?

As a rule, always have a backup plan ready, or have a dedicated accounts management outsourcing firm do the job.

by Shalaka Joshi

Mrs. Shalaka Joshi is the founder of Finsmart Solutions and operates in the capacity of Managing Director. A Chartered Accountant, with passion and love for accounting and payroll. Shalaka has more than 17 years’ experience in field of Accounting, Payroll and MIS reports.

Leave a Reply

Your email address will not be published. Required fields are marked *

five × two =

Have Questions?

FAQ'S

How does Outsourced Accounting work with Finsmart Solutions?

With new technology, working as your virtual/outsourced accountant/partner has become simple. You can opt for any of the following delivery models: Remote, Visit Based Or Dedicated Resource and we would be able to customize the solution accordingly. Our team is well trained to work on the accounting software of your preference ensure deliveries are met as per the set date plans.

What time zone you work in?

We have the flexibility to work in any time zone as preferred by the client, be it real-time, overlapping time or offshore time.

What is your cancellation policy? What if I prepaid for the year?

We want you to work with Finsmart Solutions because you’re happy with the service, not because you signed a contract. You can cancel anytime with one month notice period

Can I speak to someone who has or is working with you?

Yes of course! We want you to be sure that you are making right decision by choosing us and hence we would be glad to share our references with whom we are working with.
However this can be done post our initial discussions about your service requirements and our proposed service offering.

Let us do your books so you can run your business.

Contact us today to learn more

Finsmart SolutionsHQ
Electronica Finsmart Solutions Pvt. Ltd.
1, Mandakini, S.No. 64/24,
Income Tax Office Lane, Erandwane,
Pune, Maharashtra -411004 INDIA.
Our locationsWhere do we Serve?
https://www.finsmart.co.in/wp-content/uploads/2020/05/WM_01_277x121.png
Get in touchFinsmart Solutions Social links
Finsmart SolutionsHQ
Electronica Finsmart Solutions Pvt. Ltd.
1, Mandakini, S.No. 64/24,
Income Tax Office Lane, Erandwane,
Pune, Maharashtra -411004 INDIA.
Get in touchFinsmart Solutions Social links
Taking seamless key performance indicators offline to maximise the long tail.

Copyright by Finsmart Solutions. All rights reserved.

Website Design and Developed by KP Infotech

Copyright by Finsmart Solutions. All rights reserved.

Designed and Developed By —–