In today’s volatile business landscape, economic uncertainty presents significant challenges for businesses, large and small.
Fortunately, accountants are uniquely positioned to help organisations weather turbulent economic headwinds, helping them survive and thrive regardless of financial obstacles.
This article outlines the role of accountants in strengthening financial resilience during economic turmoil, covering tips for enhancing company cash flow management, strategic planning and more.
Obstacles to Financial Resilience in the Post-COVID Era
Over the past four years (since the 2020 COVID-19 pandemic), businesses the world over have faced an unprecedented amount of economic challenges, including:
- Rising inflation and interest rates: Global inflation has surged to multi-decade highs in many countries, prompting central banks to raise interest rates, which increases borrowing costs for businesses and consumers.
- Supply chain disruptions: The pandemic restrictions created vulnerabilities in global supply chains, with shortages, delays and increased costs still being felt today across a range of industries. For example, the worldwide semiconductor shortage continues to delay the production of new cars and other electronic devices.
- Geopolitical tensions: Regional conflicts and trade embargoes disrupt supply chains and force businesses to reassess their international trade strategies.
- Skills shortages: Many industries are experiencing labour shortages, impacting productivity and business growth. For example, the lack of skilled IT professionals is hindering the development of new technologies and digital transformation initiatives.
Widespread economic apprehension combined with the rising business costs has created a complex operating environment for businesses. In this context, the role of accountants has become more vital than ever before.
Role of Accountants in Cash Flow Management
Cash flow is the lifeblood of any business. Accountants can assist companies struggling with cash flow management in several ways, including:
- Deploying data analytics, cash flow management and financial forecasting tools.
- Identifying areas where companies can reduce operational costs.
- Advise on strategies to accelerate and manage accounts receivable and accounts payable processes.
Role of Accountants in Proactive Risk Assessment
In times of economic uncertainty, proactive risk assessment and management is essential. Accountants can identify and mitigate business risks by deploying the following strategies:
- Perform financial health checks at regular intervals to identify potential challenges.
- Analyse broader market trends to help businesses capitalise on revenue-boosting opportunities.
- Evaluate the impact of potential regulatory changes and help companies prepare.
Role of Accountants in Strategic Financial Planning
Strategic financial planning is crucial for building long-term business resilience. Building a strong relationship with your accountant can help business leaders position themselves for success in the following ways:
- Create flexible budgets that can adapt to external economic uncertainty and changing financial circumstances.
- Advise on diversification strategies to spread risk.
- Explore funding opportunities to boost financial resilience.
INAA: Strengthening Financial Resilience During Economic Uncertainty
As economic uncertainty becomes the new normal, accountants can help businesses weather economic downturns and maintain stability.
Here at INAA, we offer networking events and resources to accounting professionals worldwide. Business leaders are also invited to connect with our accounting network, which spans 50 countries, to get advice and support in expanding their operations to new regions and getting ahead of their competitors. If you would like to learn more, visit our member benefit page or sign up to become an INAA member today.