The recent Russia-Ukraine war and the pandemic are reminders of how recessions keep occurring and affect every business. Whether you are a startup or a legacy enterprise, recession causes disturbances such as drop in sales, payment delays, inflation, defaults and drop in production etc. for every sector. While it is impossible to prevent future recessions, there are several ways in which technology, especially robust ERP software can help a company prepare for recession.
Using ERP software to prepare for future recession
Advanced ERP on cloud solutions act as a central command centre gathering, and analysing real-time information from every department of an enterprise. This access to all-round information and end-to-end visibility of the business operations and workforce activities enables well-informed decision making and future forecasting. Here are some tips to use ERP software to prepare for a future recession:
Identifying and focusing on the most valuable areas – While every department is necessary to run a business, there are always going to be some areas that will contribute more value, and others that would be dispensable or ideal for downsizing in recession times. This is where the visibility offered by ERP helps in identifying the most valuable areas and acts as a talent management system for those departments. Thus, it can help keep the resources satisfied and even create a roadmap for their development. Cutting down budgets, freezing new hiring or downsizing an office that has not been generating adequate revenue are some of the steps that can be taken on the basis of data inputs from ERP software.
Reducing debt and avoiding liabilities – An advanced ERP on cloud system can provide end-to-end visibility of financial operations and enable businesses to assess their existing debt or the need for new loans. If a recession is forecasted then cutting down on expenses, building cash reserves and avoiding financial liabilities such as corporate credit card expenses etc. can help in reducing the impact.
Superior access to capital – While cutting down on expenses and paying off debts are great steps, these need to be combined with building additional and reliable sources of capital. For instance, securing a line of credit for your business that can help overcome short-term capital crunch during recession times. Advanced ERP on cloud solutions with integrated financial modules would enable tracking of activities, personalised reporting and dashboards, as well as automation of workflows. Simplification of processes would directly lead to better efficiency and analysis.
Diversification of income sources – Recession invariably hits sales and revenue generation. That’s where businesses with a single source of revenue are likely to feel greater pinch. Utilising the data generated by ERP, businesses can identify patterns and trends in the market and new areas of earning for the business.
Reducing inventory need – In manual processes, businesses tend to maintain large inventories and hire workforce that can be redundant at times. However, ERP on cloud can help optimize inventory stocking and personnel as there is a better understanding of existing as well as future needs.
Moreover, with ERP on cloud, businesses can maintain lower levels of inventory without the worry of facing shortages.
Building business resilience – Recession can cause stress and disruptions for the companies as well as employees. However, using modern ERP software can enhance collaboration, visibility of the functioning across departments, and ease of communication. Thus, the employees are better engaged and synchronised to perform optimally in adverse scenarios like recession.
Which ERP on cloud to choose
Singapore is one of the hottest global destinations for businesses. There are a plenty of SaaS companies offering ERP on cloud solutions. However, to find the best ERP software, it is important to evaluate and compare a few software options.
The service provider should be a company with global expertise and extensive experience in developing and deploying ERP on cloud solutions. A great solution would be one that offers end-to-end integrations with different complementary modules such as Finance and Accounting, Supply Chain Management, Enterprise Asset Management, Project Management, Production and Manufacturing, Quality Management, and HR & Payroll solutions.
When you deploy such a holistic solution for your business, you can not only make it recession proof, but also experience stronger growth, employee engagement, customer satisfaction and revenue generation year-on-year!