The Role of a CPA In Helping Small Businesses Navigate Uncertain Economic Times

When the nation's economy starts to slow down, you as a small business owner cannot help but worry about what lies ahead. As the COVID-19 pandemic demonstrated, uncertain economic times can emerge from nowhere in a hurry. When this occurs, having a plan in place can mean the difference between your business staying afloat after the crisis is over, or instead closing the doors to a business you worked so hard at for years to make a success. To help navigate the rough economic waters, here is how a CPA can help your small business.

Emphasizing Your Balance Sheet

When economic times get tough, you will probably still be focusing primarily on how your business is doing in terms of sales. While this is certainly important, your CPA will also have you focusing more and more on your company's balance sheet. This will be critical for your business, since the balance sheet emphasizes cash flow. As the economy sours, your CPA knows putting aside as much cash as possible may help you survive and outlast other competitors who may have to close their businesses.

Analyzing Your Accounts Receivables

In uncertain economic times, you will need to work closely with your CPA to do a careful analysis of your existing accounts receivables. Remember that since these are people who owe your business money that can help keep your cash flow at acceptable levels, it is vital that you make sure you get paid as quickly as possible. Should the folks who owe you money go out of business and you fail to get the money you were counting on, the consequences could be dire for your business.

Advice With Negotiating with Your Suppliers

As you and your CPA are taking a closer look at your accounts receivables, don't be surprised if your CPA also recommends that you perhaps try to renegotiate your own payment terms with various suppliers. For example, if the economic forecast is gloomy, renegotiating beforehand can give you more leverage. If all goes well, you may be able to strike new agreements with suppliers that will have you going from having to pay within 30 days to perhaps 45 days, which can have a big impact on how much cash you can keep on hand for your business.

Decreasing Your Debt

Your CPA can help you learn about the best strategies you can use to decrease the existing debt you have for your business. Again, this comes down to negotiating while you still have some leverage with your bank. By examining your current level of debt, how much credit you currently possess, and how that debt is impacting your cash flow and expenses, your CPA can help you learn how to enter negotiations with your lender from a position of power.

Finding Tax Breaks

If there is one thing your CPA is very good at doing, it is finding those elusive tax breaks that can save your business plenty of money come tax time. Since the IRS is seemingly always changing tax laws, there is no way you as a small business owner can keep up with the changes and how they will impact your business. However, this is the job of your CPA, and they do it very well. By sitting down with your CPA and looking over prior tax returns and how any new laws may change things for your business, you may find yourself having to pay fewer taxes during times when cash is tighter than ever for your business.

Reviewing Discretionary Spending

Even if you think you have trimmed everything possible from your company's budget, chances are your CPA knows better. Thus, it is always wise for you to have your CPA meet with you to analyze your discretionary spending and see if there are areas where additional cuts can be made. As an example, your CPA may recommend that you make more effective use of the internet to help decrease your company's administrative and operational costs. Should you still want your employees to get the latest training in various areas of your business, you may find this can be achieved through virtual training sessions online, rather than traveling in-person to various locations. Before you know it, you and your CPA may find more cuts to your budget than you ever thought possible.

Advice on Diversification and Expansion

While you may think uncertain economic times means you cannot possibly expand your business or launch new products or services, the fact is it may be an excellent time to consider these ideas. In these situations, your CPA can advise you to take a step back from where your business is at the moment, which will allow you to rethink your current strategies, review what is and is not working for your business to generate cash flow and profits, and consider the possibilities that may lie ahead. In many cases, your competitors will be doing the exact opposite of this. Thus, if you go on the offensive while everyone else is playing defense, you can use the advice of your CPA to capitalize on numerous opportunities other small businesses are overlooking.

Remind You to Not Panic

Perhaps most importantly of all, your CPA will be there to remind you that even though times are tough, now is not the time to panic and make critical mistakes that will hurt your business now and in the years ahead. Remember that since your CPA has years of experience, they have dealt with other tough economic times before, and have helped other small businesses navigate and emerge on the other side. By speaking candidly with your CPA and trusting the advice you are given, you can position your business for success once things begin to improve.

Keeping these tips in mind during an economic downturn will help your small business in numerous ways. As you continue to work with your CPA, you'll find many problems you thought doomed your business may simply be new opportunities to move ahead of your competitors.