Scenario Planning For The Eventual Recovery – ERP Is The Key

Many companies are addressing today’s economic uncertainty through scenario planning.  This strategy is particularly effective when facing a situation of uncertainty fueled by a variety of factors 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 with Day’s Sales Outstanding (D.S.O.) and Inventory Turns as key benchmarks.  Cash can be used to pay off debt, negotiate vendor contracts to take advantage of vendor discounts and for strategic investments.
• Customers need to be catered to and improving customer service is paramount.  The costs related to acquiring new customers far outweigh the costs of maintaining them.  Studies and surveys of sales and marketing professionals show that referrals can be of great value in generating new sales.
• Credit lines, whether needed or not, are important and securing lines of credit 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 appear.  It 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 consider making the purchase of a new ERP solution or an upgrade of their existing one a priority when budgeting for the coming months.

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

By Micro Force – The Largest and most Experience Dynamics GP-only Partner Celebrating 25 years of serving the Metro New York Region

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