Tips for management accountants in tough times

Content Summary

Forecasting

Forecast demand for the coming 12 to 24 months and identify potential excess capacity. Consider how to reduce it through efficient staff scheduling, disposal of excess assets or allowing leases on unnecessary equipment to expire.

Reduce costs for your customers

Understand your customers' business and how changes in the delivery of your products and services could reduce their costs and improve efficiency. This may also increase customer loyalty.

Supplier discounts

Ask suppliers for discounts, especially in tough times. You may be surprised with the results. When asking for discounts, consider guaranteeing volume of business to promote a win-win situation.

Reduce waste

Audit your resources and eliminate waste. Remember, simple changes can save money. Recycling paper, reducing excess energy, controlling consumption of consumables and stationery are some examples of waste reduction.

Fixed and variable costs

Understand the fixed and variable cost components of your business and track them through regular reporting.

Cost control

Understand the external factors that influence your business and its cost structure. Focus on the costs you can control. Take a critical look at underperforming divisions and any that may have excess capacity. Minimise losses by closing these parts of the business.

Decision making

Make decisions in the context of the business, your industry and the economy. A robust and flexible model will help you to make sound strategic decisions. Industry analysis will reveal your market position. This analysis will highlight your competitive advantage and potential areas of concern.

Cash flow control

Cash flow management can help protect your business from liquidity problems and improve your bottom line. A disciplined focus on debtors and inventory will release cash tied up in working capital. Reducing working capital requirements will ease pressure on funding arrangements, which may lead to minimising finance charges as well. Every day you improve your operating cycle is worth money to the business.

Performance management systems

Performance management systems enable businesses to focus on maximising operational efficiency. These systems monitor key indicators which enable leaders to manage performance and to hold the business accountable to achieving targets. Business experiencing tough times usually focus on maximising operational efficiency. Consider using performance management systems such as the Balance Scorecard, to help monitor performance variables.