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8th December
written by Alan C.

Many companies are addressing today’s economic uncertainty, through a strategy typically referred to as scenario planning.  This strategy is particularly effective when facing a situation with numerous areas of uncertainty such as government policy, consumer response and Wall Street to name a few.

The key to scenario planning is identifying trends as quickly as possible and implementing the necessary corrective action. 

Regardless of the scenario used, there are three areas (referred to as the 3 – C’s) that must be prepared for.  The 3 – C’s will be the key to any strategy that is decided upon:

Cash is integral to the survival of any business.  Companies need to make sure that Assets such as Accounts Receivable and Inventory are maintained at optimal levels.  Day’s sales outstanding (D.S.O.) and Inventory turns are key benchmarks.  Cash can be used to pay off debt, negotiate vendor contracts to take advantage of vendor discounts and to make strategic investments.

Customers need to be catered to and improving customer service is paramount.  The costs of acquiring new customers far outweigh the costs of maintaining them.  Referrals can be of great value in generating new sales.

Credit lines whether needed or not are important, and getting credit in place often takes longer than expected.  Strategic acquisitions and investments are out there and should always be considered.

As companies look to effectively address the turbulent times being faced by everyone, it is important to remember that long term growth is often derived by strategic investments whether in the form of acquisitions, or in cutting edge business software such as a Microsoft Dynamics GP ERP solution to monitor business performance, and allow companies to identify and address scenarios as they appearIt is for this reason that Bonus Depreciation on business software is a key component of the 2009 American Recovery and Reinvestment Act (ARRA) and why businesses should be looking at purchasing a new ERP solution or upgrading their existing one now.

Alan Cohn, CPA, MBA, Micro Force Senior Certified Account Executive

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