The economic outlook is very uncertain in these post-pandemic times. World Bank president David Malpass gives a 50 percent chance that there will be a world recession in 2023. Goldman Sachs is a bit more optimistic—about the US, at least—forecasting a 35 percent chance of a recession in the US this coming year. Forecasters polled by the Wall Street Journal give it about a 65 percent chance of a recession. Nobody really knows.
With CFOs facing a high level of volatility and uncertainty right now, caution and conservativism are in the air. But ERP can help.
ERP During a Recession
Company executives are watching more than just the financial indicators in the economy at large. They also are paying close attention to the financial indicators and overall health of their organization right now. Along with that, they are preparing internally for the possibility of a downturn.
Enterprise resource planning solutions play a big role in this task. ERP improves organizational visibility by centralizing and rationalizing all data within a company. By serving as a single source of truth, ERP can help CFOs make moves to weather these challenging times in a number of ways.
1. Better Resources Allocation
ERP enables CFOs to see an accurate, real-time picture of the business both financially and operationally. By having this greater visibility into the details of the company, CFOs can spot where cuts will make the least impact, and where small adjustments and optimizations in operations and along the supply chain exist for improved efficiency and a better bottom line.
Analytics within ERP also can assist with spotting these opportunities, helping CFOs tighten the organization if there is a financial downturn.
2. Improved Cashflow Management
In times of uncertainty, managing cashflow more tightly can become an imperative. With the end-to-end visibility that comes with using an ERP system, CFOs can more accurately monitor and adjust cashflow by seeing the current position of inventory, manufacturing inputs needed, sales orders placed and invoices outstanding.
With this complete picture of the business, CFOs can closely manage their cash position and do so with a higher degree of precision than is possible without such end-to-end visibility. A CFO that uses ERP knows that cashflow position of the company in real-time.
3. Faster Accounts Receivable
If cashflow is a concern, ERP can assist CFOs with improving invoice management and time to payment.
Invoices and bills of sale can automatically be generated at the time of transaction when an organization is using ERP. ERP also can send automated invoice reminders to customers, and flag late payments for faster resolution.
With no delay in invoice issuing or uncertainty about the status of payments, CFOs can use ERP to speed up time to payment and improve cashflow.
4. Enhanced Employee Retention
This won’t come as a news flash, but there’s a talent shortage since the pandemic. Across almost every industry, businesses are finding it hard to attract and retain employees necessary for smooth operations. This is especially true for top talent, which hurts the competitiveness and ultimately the financial position of a business.
One way to help attract and retain talent in this environment is through a better work environment, and ERP can help. By automating many of the routine processes of a business with ERP, companies can reduce the boring, mundane tasks that put off employees. When employees can focus on the more exciting, intellectually stimulating aspects of their job and leave the scut work to the machines, work-life improves. And where work life improves, so does employee retention.
5. Better Utilization of Employees
Similarly, CFOs can boost employee productivity and keep headcounts down during recessionary pressures through the automation that ERP provides.
Automation of routine tasks is low-hanging fruit for boosting employee productivity, the original value proposition of computing. ERP makes it easy to spot and build automation around tasks that can be automated. Assistants built within ERP can also help with this process.
ERP also helps businesses establish standardized processes and improve workflows through process automation and enforcement. The standardization of company processes can further improve productivity and enable CFOs to get more with less staff time.
These are just a few of the ways that ERP can aid CFOs during uncertain times when efficiency and belt-tightening are in order.