The Current Challenging Global Economic Environment Essay

1419 WordsMay 22, 20166 Pages
Uncertain economic times In the current challenging global economic environment, there is downward pressure on sales and margins. The overall effect is an adverse impact on the bottom line, leading to lower profits or even losses. In such times, reigning in costs and expenses are even more crucial. Let 's explore some cost control strategies that could help a company adapt and survive through the current uncertain economic times, as well as to position it strongly for the upturn. Broadly, we could look at them as financial and people strategies. Financial strategies BALANCE SHEET There are 3 aspects in a company 's balance sheet which we could look for cash flow and cost saving opportunities: Accounts Receivables (credit) Management Most businesses offer credit to customers. The related costs of credit to a company include the cost of financing (borrowing cost or opportunity cost for funds tied up), cost of running credit operations, cost of time to chase for debts, cost of bad debts and cost of debt recovery (legal fees). This area is particularly critical given the present tight credit situation faced by many companies. By invoicing promptly and accurately, a company can ensure that its debt collection process is timely and efficient and that crucial cash flows are received promptly from customers. Having a robust credit management process will help a company reduce the risk of slow payments. In particular, through rigorous credit screening and taking early
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