A recession can be defined as a significant, widespread, and prolonged downturn in economic activity. Because recessions last six months or more, one rule of thumb is that two consecutive quarters of decline in a country’s Gross Domestic Product (GDP) constitutes a recession. In the United States in the first half of 2022, there have been two consecutive declining quarters of GDP.
With the hangover of the pandemic still enduring for small and medium-sized businesses, the global supply chain recovering, stock markets fluctuating, and the war in Ukraine showing no sign of ending. Times are very challenging for companies who are trying to survive and make a profit in this climate. The world could be on the way to an economic recession. Steady cash flow is essential during these times.
Having strict and consistent financial workflows in place during a recession is key to resilience. Getting paid as fast as possible and having that money in company bank accounts is the overriding goal. A company needs to stay on top of its outstanding accounts receivables in order to maintain a steady and reliable flow of cash.
Cash flow is one of the leading metrics in analyzing the current health of a company. If a company has poor cash flow, it will more than likely have a higher than average rate of Days Sales Outstanding (DSO). Being able to plan for the future of the company, while using current capital is a lot healthier for an organization than borrowing money at high interest rates. Being self-sufficient is a good barometer for success, getting your AR process streamlined is the best way to achieve this.
The AR process can be challenging for a variety of reasons that we are now going to look at in more detail.
The use of Accounts Receivable software can help organizations improve many aspects of the AR process. Streamlining the AR process allows companies to get paid earlier and more consistently, reducing DSO figures while also achieving a strong and steady flow of cash. Below are some of the key uses and benefits of AR software that will help companies to navigate an economic recession.
If you would like to discover how Cashbook can help automate the cash application process. Please contact our team by calling +353 61 338 400 (International) or 630-352-2228 (North America). Alternatively, you can email firstname.lastname@example.org. We look forward to talking with you and helping your company realize the benefits of cash automation technology first hand.