Why Is An Accountant Helpful During A Changing Economy?

Let’s face it: we’re staring down a changing economy. While we’re all about a positive outlook, and we love to look on the bright side, the future is a little uncertain right now, and we’re hearing from lots of business owners who are wondering what comes next. Many of them are looking for ways to “future-proof” their operations - despite the economic downturn.

Fortunately, you’re not alone in your efforts. And planning well makes everything a little less scary! When uncertain economic times hit, your accountant is your greatest asset. 
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In this blog, we’ll discuss how an accountant can help you through an economic downturn. We’ll also discuss why now is a great time to hire an accounting team.

The Financial Future is Uncertain

The financial broadcasts are a little bit of a bummer right now, right? Combine that with a bit of doom-scrolling, and it’s easy to see why the “R” word is on everyone’s mind.
 
Economic growth is shaky, inflation continues to rise, and business owners are concerned that a recession is right around the corner. Despite those realities, though, spending remains high, and jobless claims are steady or improving, so economists are more than a little confused about what the heck is going on with this changing economy.

While it’s impossible to predict the future (believe us - we WISH we had a crystal ball!) It's obvious the financial landscape is changing. Fortunately, you don’t have to just go along for the ride when it comes to your business. It’s time to hop into the driver’s seat, grab the wheel, and steer toward what matters most.

Why Hire an Accountant to Help You Navigate the Changing Economy?
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So, the future is muddy, and you want to take a cautious approach to business spending. You know that every penny matters, and you want to be smart right now.

Unless you have a planning method that allows you to track your expenses, though, it’s tough to tighten your belt for what lies ahead.

It’s also hard to predict how you’ll perform tomorrow, even if things in your business or industry change.
It’s a little bit like heading out on a road trip with no GPS and no map.
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Fortunately, an accountant can help you navigate the changing economy. Think of us as your trusty navigator, here to help you get where you want to go.

A qualified bookkeeping team will be able to do the following:

• Monitor your expenses. This allows you to know where to decrease spending or reallocate resources.
• Manage available capital and leverage your cash as wisely as possible.
• Automate routine tasks. This can help you reconcile monthly bank statements, help you prepare reports, and more while saving time and focusing on building your business. 
• Update your budgets as economic conditions change.
• Help you understand your profit margins. This allows you to price your services accordingly and future-proof your company.
• Provide reliable, real-time advice about cash flow management, bookkeeping, billing, and more. 
• Help you prepare your books for taxes. An accountant can also decrease your tax liability and identify credits and deductions available to your business. 
• Create financial forecasts, which can help you start planning for what comes next. 

The bottom line is this: accountants are versatile, agile partners for businesses of all sizes. When a business hires a good accounting team, they gain access to critical information. Businesses without accounting teams, meanwhile, just have to keep wandering around without a map.

Want to prepare as well as possible? The best time to hire an accountant is before a recession hits, so you can prepare for whatever the economic environment holds.
 
6 Quick Tips to Recession-Proof Your Business

Want to prepare your business for an uncertain financial future? Here are a few tips we recommend:

1. Create a cash flow and management plan
The last thing you want to do during a recession is run out of cash. 
To prevent this, start by understanding your current cash balances and developing a cash flow forecast that covers at least the next quarter of your business. 
This way, you’ll have some advance notice if things start to change over the next few months. If you ask us, knowledge is power, and getting granular about your business operations is the best way to combat uncertainty.
 
2. Stay within your budget
Next, set a budget and stick to it. When you spend less than you make as a business, you’ll have an economic cushion that can help you navigate tough times. It’s a simple trick but oh so effective!

3. Build your business emergency fund
One of the key tenets of personal finance is the creation and maintenance of an emergency fund. The same goes for your business, though. 
We recommend creating a cash cushion that can act as an emergency fund to cover up to six months of essential costs, like utilities, payroll, inventory, and more. 
This way, you’ll have enough of a cash cushion on hand that you’ll be able to ride out the hard times with less stress. 

4. Pay down your commercial debt
If you have outstanding loans, toss some extra cash toward them right now. If we are heading into a recession, entering it as debt-free as possible is the best way to save money on interest expenses and allocate those funds to cash reserves instead.

5. Find ways to cut back
If you feel the need to tighten your belt a bit, start by decreasing your operating expenses as much as possible. The first step is to evaluate your biggest costs and identify places where you can reduce spending. 
Examples include leveraging early pay discounts from suppliers and looking for more affordable options for software and programs you rely on. 

6. Diversify to keep cash flowing
Diversification is the ultimate key to improving cash flow and making your business recession-proof. 
This is especially true for small companies, who will need cash on hand to survive an economic downturn. 
With this in mind, consider offering new products or services adjacent to your existing business. 
For example, if you run a brick-and-mortar retail store, consider expanding your reach by adding online shopping. If you run a service-based business, add new services that complement what you’re already doing. 
The more diversified your business is, the more ways customers have to interact with you - even during tough economic times.

Get Help With Your Books in the Face of a Changing Economy

Whether you’re pivoting, curtailing operations, shifting your approach, or expanding, the first step in any major transition is to get (and keep) your books in good order.
 
Fortunately, an accountant can help you prepare for what’s happening now, and what’s likely to come next. We’ll be your hype team during tough times, and your trusted advisor in even the most confusing economic climates.
 
Our team can help you create detailed planning scenarios that allow you to respond to transitional periods and adapt to industry or market changes, regardless of what the time horizon may be. We also provide business planning services to help you prepare for the future and make contingency plans for periods of economic downturn.
 
Here at Elevated Advisory & Accounting, we work with small and medium-sized business owners to future-proof all your operations.
 
No matter what the future brings, our team of accounting & bookkeeping professionals serves customers in and around the Kalispell and Whitefish, MT area. We'll work to provide accounting solutions that grow with You - regardless of whether we’re facing an economic boom or a downturn.

Contact us today to learn more about our services and how we can help you.

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