Role of Finance Manager at the time of reccession-
1. Put cash flow and financing on the agenda for every management meeting
Identify actions that you can and will take to improve and record them and schedule them into your time planning system.
2. Regularly update cash-flow forecasts
This is especially critical if you have a seasonal business (e.g. many retailers build up to a Christmas peak) or if you have to make large occasional cash payments.
3. If there is a conflict between profitability and cash-flow take the cash-flow option
This may be difficult to do but remember the business stops to trade when it runs out of cash and can't meet the next payroll or satisfy creditors demands for payments of essential supplies.
4. If you have a term loan or overdraft be aware of any covenants and constantly monitor how close you are to breaching them
5. Prepare thoroughly if a review is coming up on any of your financing facilities
Banking relationships may have been quite cozy in recent years if your performance has been good and the banks have had a relaxed lending policy.
With the coming recession, your performance may dip sharply. The banks report that funds are still available so the credit crunch has not restricted availability but lending terms are likely to be tougher, both in terms of interest premiums and security requirements.
Since proper preparation prevents poor performance, if you put in the effort to demonstrate that your business remains worthy of bank support and your case remains strong, there should not be a problem.
6. If limits might be threatened "think the unthinkable" regarding the sale of assets
Anything that you are not using which has value can be sold and you can expect higher prices early in the recession than when there are many bankruptcy and liquidation sales.
Also look at assets where you are only using a fraction of the capacity. You may be able to generate cash and save costs by selling...