#5 CFOs Need To Take Decisive Action to survive Looming Recession

The economy is currently experiencing a difficult period with rising inflation and interest rates, increasing fuel and housing costs, and falling stock market values. Companies are responding by cutting expenses and focusing on more efficient growth, but these decisions may not necessarily be the best for long-term success. This newsletter offers expert advice on how to navigate the market downturn and come out stronger during a recession.

Reducing Expenses

1. Companies facing financial troubles may initially cut headcount as it is a major expense, but CFOs must analyze the contributions of each department and employee before making cuts, as it can negatively impact efficiency and revenue. The law of diminishing marginal returns should be considered, and alternative options like hiring freelancers or agencies should be explored.

2. One should also consider setting higher targets and goals for the team, cutting down on subscription costs, evaluating salaries and doing an ROI analysis. CFOs should also consider the long-term implications of cutting headcount and the negative impact on culture and team morale. Rehiring employees less than a year after layoffs can be an expensive and difficult process in today’s employee market, and can quickly erase any money that was saved.

1. To reduce subscription costs, companies can reevaluate systems they don't use, reduce packages of software they do use, renegotiate contracts, and eliminate duplicate subscriptions. Tips include identifying unused licenses, downgrading packages, rethinking or renegotiating contract prices, and identifying duplicate subscriptions. The use of financial planning and analysis software can also help by providing a comprehensive list of software subscriptions and details such as the number of users, payments, and package options. RevsUp can help!

2. Companies can save money by using software solutions from the same parent company, such as Microsoft Suite or Google Workspace, and getting additional products like Teams or Meet and Chat for free as part of the package. Additionally, using spend management software can help control and manage spending by providing an approval flow process and integrating it with financial planning and analysis software.

Proactive Scenario Planning

• During times of market volatility, it may not be wise to sign long-term deals for financial planning software. Instead, companies should opt for flexible and monthly contracts, as customer sentiment and market conditions can change rapidly. Companies can opt for accounting software like RevsUp which offers monthly payments.

• Companies can use FP&A software solutions for scenario planning and efficient decision-making during an incoming recession. RevsUp provides financial automation and forecasting, which can fill the gap during uncertainty and be more cost-effective than hiring more finance experts. An example is Microsoft, which has seen an increase in revenue while keeping its finance department headcount flat by investing in financial technologies and automation, resulting in a more professional and accurate department while saving money on salaries.

One way to save money is by reducing expenses such as subscription costs, which can be done by cancelling unused licenses, renegotiating contracts, or consolidating services.

CFOs should also use financial planning and analysis tools to understand the long-term effects of their decisions and plan proactively.

It's also important for CFOs to reduce headcount only after thoroughly understanding the implications and to use scenario planning to gain better insights into how decisions will impact the company.

RevsUp Makes Forecasting Easier!