Grant Thornton UK LLP recently published the Recession Guide (the Guide) to help its clients identify effective solutions for coping with the financial challenges they face in the current economic situation.

The Guide focuses on assisting businesses under pressure to do the right things, so as to give themselves greater room for manoeuvre. At the same time, it helps other firms take advantage of opportunities for realising their ambitions more rapidly than they initially planned to do.

Some areas it focuses on are:

Breaking through funding barriers

As the recession deepens in the aftermath of last year's banking crisis, businesses find it increasingly difficult to raise finance or renegotiate existing financing structures. It is important for them to understand their exact funding requirements and to identify funding opportunities and the most competitive options.  

Working capital management

Many businesses do not appreciate the benefits of good cash/working capital management, and they fail to recognise the right level of working capital for their needs. Short-term solutions for managing cash flow in the current difficult situation – such as delaying payments to suppliers – may be detrimental to a business in the longer term.

Keeping profits healthy

While many businesses are concentrating mainly on their cash flow and the availability of funding facilities to see them through, their profitability remains a big concern at a time when margins are being squeezed. They need to focus relentlessly on each of their income and cost lines, in order to ensure they are doing everything they can to protect their margins.

Operations and cost-reductions

The effectiveness and efficiency of a business's operations are fundamental to its success. But after it has shed obvious surplus costs, it still needs to achieve significant improvements by using both its human and tangible assets more efficiently.

It is therefore vital for them to test their business's operations thoroughly, and to improve these in ways that will enhance their ability to survive the recession and be ahead of their competitors when trading conditions begin to improve.

Communication and compliance

Companies are under increasing pressure to comply with various accounting and disclosure standards. It is therefore critical for them to ensure their compliance is up to date and carried out in an effective manner, combined with full communication with their stakeholders and interested parties.

The management of businesses need to make certain they are acting correctly, in order to avoid being exposed to personal liability risks if circumstances overtake them.

People

The present economic climate is forcing employers to review all areas of their business, including staff numbers and the cost of reward packages. It is a difficult conundrum: How to deal sensitively with those they need to let go, while ensuring those who remain receive incentives to give their best efforts at a time when cash is tight and pay rises may not be an option?

Strategic directions

Today's market demands lucid strategies combined with a management that implements them in a focused and persistent manner. Businesses need a clear understanding of their core capabilities, the strengths of their business and where the opportunities exist. It is also important for them to consider long-term financing strategies in the new funding environment.

Well-structured and well-managed businesses that do the right things quickly and decisively will always find opportunities amidst uncertainties. The Recession Guide gives practical advice to help companies make the big decisions.