How Can Your AP Team Assist in the Fight Against Recession?

 Several economists are currently on edge as a result of the pandemic's multiple effects, as well as supply chain disruptions, which have limited economic productivity and driven up costs. These high costs have caused widespread inflation, prompting the Fed to raise interest rates, raising the cost of capital for firms and borrowing costs for consumers. These borrowing costs should gradually reduce demand for products and services from both firms and consumers, allowing prices to return to pre-inflationary levels. Unfortunately, inflation does not exist in a vacuum. Russia's invasion of Ukraine and ensuing sanctions have increased the global economy's annoyance and volatility. It makes predicting what will happen in the following 3-6 or even 12 months difficult. When prices are rapidly rising, one of the most prevalent fears is a recession. Earlier this summer, experts predicted the most severe consumer price rise in the last 40 years, and other experts now expect a recession in the near future. A recession is technically defined by experts as two or more consecutive quarters of decreasing GDP. Others define a session as a sustained drop in economic activity across the global economy that lasts more than a few months.

 

Three critical priorities for AP teams amid a downturn

AP teams believe that the effects of economic downturns will be felt, hence they concentrate on

 

Efficiency

During recessions, ap teams must maintain an average level of output with limited resources. Without the opportunity to increase manpower or spend more money on business process outsourcing, these teams must optimize workflow wherever feasible. They must monitor the AP mid-rises in order to discover opportunities for process optimization and then track the changes.

 

Relationships with vendors

Due to global supply chain interruptions, AP teams have made supply partnerships a top focus. With few suppliers capable of dependably sourcing critical commodities, firms must prioritize maintaining robust supply relationships.

 

Visibility

When it comes to recession-related companies, stakeholders must have a clear insight into cash flow and working capital in order to manage critical business choices while experiencing a cash shortage.

 

How can AP teams assist you in combating the recession?

 

Concentrate on what AP can control.

It would be preferable if you searched for ways to reduce costs by optimizing their procedures and reducing inefficiencies in spending analysis. These are the lessons you took away from the epidemic. They do, however, apply to a larger recession.

 

Create reliable cash forecasting systems.

During the recession, cash forecasting is crucial since corporate leaders' tactics were to cut back on expenditure. To create a well-organized business plan, executive teams must predict firm expenditure, which necessitates the use of a forecasting model.

 

As a result, AP can connect with suppliers more efficiently and assist you in dealing with the recession.