More than a year into the recession, businesses are budgeting for 2010 and those prepared to react ”“ and fast ”“ through the remainder of the slowdown will prevail.
“I can”™t think of any particular industry that”™s having a great year,” said Edward H. Roberts, partner at accounting firm Citrin Cooperman & Co. L.L.P. in White Plains. “Fortunately, not too many companies I know have gone out of business, but their sales are way off; their top line is way off. In any recession, you try and hold on and make changes. The ones who make the changes the fastest are the ones who are going to survive.”
Well-planned budgeting is essential to the success of a business, according to Roberts.
“Budgeting is a very big thing that we promote for our clients,” he said. “People are budgeting more now. I think it takes some of the fear and angst out of what”™s ahead. That”™s why we suggest doing it under two or three scenarios, like a best-case scenario or worst-case. You need to know what your top line could possibly be, and maybe have different options.”
The first rule of budgeting in a recession: Don”™t panic.
“Get a better sense of where you stand by reviewing your cash position and your anticipated cash needs,” Roberts said. “Are they in line with your business”™ short-term needs, goals and risk tolerance?”
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Roberts suggests checking with lenders on the status of the business”™ credit lines. Although he has seen credit lines renewed, they may be cut in half.
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“We find still, even today, that clients are having a tough time with banks and renewing their lines, and that changes drastically how you can operate your business,” Roberts said.
It”™s also essential to review the lines of credit extended to customers.
“In our industry, we see the economy being tough in different ways, and one of the ways is our customers start paying us slower and slower, so we as a firm are very conscious of our receivables and we address them every week,” Roberts said. “It”™s important to stay on top of them and make sure the money”™s coming in. There are ways to check people”™s credit, and it”™s important to do.”
On the flip side, “Look at the way you”™re paying bills. Make sure you”™re paying your bills in a systematic way.”
Monitoring inventory is also important; running lean and mean is the idea in these times, Roberts said.
“Any of the big overhead items in your companies should be addressed on a regular basis, and more so when times are tough,” Roberts said.
Besides White Plains, Citrin Cooperman maintains offices in Connecticut, Pennsylvania, New Jersey and New York City.
