WALTHAM, Mass. – Nov. 20, 2008 – Organizations responding to ongoing economic change can take steps to strengthen their ability to weather uncertainty, according to Accounting Management Solutions, Inc. (AMS), a leading provider of accounting, financial management, and consulting services to private, public, and nonprofit organizations.
“Standing still is rarely an option when markets are unsettled,” according to AMS Managing Director Robert Angell III. “There are steps all organizations can take, which we are recommending to our clients, to ensure they are best prepared.”
Among those steps, according to Angell, are the following:
Reassess revenues. Often, 20% of customers can account for 80% of revenues. Update your revenue profile to determine who is driving most of your revenues today. Then, check in with those customers to learn how the crisis may affect their ability to continue to be customers.
Step up monitoring of receivables. Cash will be king in tight economic times. Be sure that customers are paying according to their agreements.
Conserve cash. This includes avoiding additions to overhead in terms of staff and space, collecting receivables quicker, and being stingy about extending credit. Project cash flow six months out and decide whether you like what you see. If not, take corrective action.
Strengthen your balance sheet. No one knows how long financial markets will remain unstable, but taking steps now and over the next six to 12 months to improve current, cash-to-debt, and debt-to-equity ratios will help the company weather future uncertainty.
Check accounting controls. Because you need to know that your accounting and financial management system is delivering the fully accurate information, now is a good time to make sure your accounting controls are doing the job they’re designed to do.
Develop contingency plans. The time to think about what to do under different scenarios is now. For example: How do you alter operations if revenues drop by 10%, 15%, 20%? What investments in the business are absolutely vital to continue?
Keep your lenders informed. No one likes being surprised. Even if things are going well, it pays to keep senior and junior lenders informed of your financial condition beyond the covenants of your agreements.
Don’t overreact. If you have put in place accounting and financial management systems that deliver timely and accurate information, make sure all the process flows are working. If you aren’t getting the information you need to make decisions, you’ll need to make adjustments.
About Accounting Management Solutions
Accounting Management Solutions, Inc. (www.amsolutions.net), based in Waltham, Mass., is a leading provider of accounting, financial management, and consulting services to private, public, and nonprofit organizations throughout New England. In 2008, the company established offices in New York and Providence. AMS is ranked as one of the fastest-growing private companies in the United States by Inc. magazine, and in Massachusetts by the Boston Business Journal.
