Uncovering Opportunity In A Recession

© AdobeStock
The impulse to spend less may not be the right approach. Instead, think about spending smarter.

Recession. It’s on the lips of every economist, investor, market analyst and CFO I know. While we don’t know for certain if and when a technical recession could start, most indicators signal turbulent waters ahead.

During times of crisis, especially economic crisis, too many CFOs think the only answer is to pull back and hope that significant cuts are enough to get to better days. But it could be in their best interest to take a different approach, maintaining confidence that they can weather a recession without resorting to broad cutbacks and mass layoffs. 

Our own experience proves that you can survive economic crisis and emerge stronger. Coupa came out of recession in 2009 with new venture capital and momentum, catalyzing our journey toward our IPO in 2016.

Don’t get me wrong: A recession brings disruption. But the experience can be less like falling off a cliff and more like traveling an extremely bumpy road. CFOs that prepare thoughtfully for what’s coming will be positioned to capitalize on opportunities for growth and scale, even as they brace themselves for potential challenges.

Investing Smarter

Instead of focusing only on investing less, many CFOs will see this as a time to invest smarter. 

This path runs directly through the back office—the center of all processes used to manage a company’s liquidity and financial position. Once you have a clear picture of your cash and your costs, you’ll be in a position to make thoughtful, smart investments, for example, in R&D or M&A—seizing the opportunity to increase your advantage. Let me share an example.

The CFO of the Leukemia & Lymphoma Society, a $500 million nonprofit, spent years advocating for the opportunity to execute a digital back-office transformation. He knew that L&LS needed to address long-standing sources of waste (and irritation) to help the organization make better use of its resources. The project languished as decisions were delayed—sometimes by months, sometimes by years. 

Once that transformation took root, the organization not only improved visibility into liquidity, but also drove millions in savings in one year alone. The effort enabled their team to more thoughtfully direct and even increase investments in cancer-curing research and support new projects that expanded patient access to treatment. As an aside, their CFO recently shared that L&LS is now in their best financial position ever. 

Improving Your Bottom Line

Another area that deserves attention in an economic crisis is your supply chain—a chief contributor to your top and bottom line and the biggest business risk, according to 84% of CFOs in a recent survey. Disruptive market conditions require you to continuously adapt and redesign your supply chain. Luckily, technology can help—and will be well worth the investment. Here’s an example.

A leading Fortune 500 food manufacturer faced critical supply chain shortages two years ago. But, unlike competitors, this company invested in a supply chain rapid-response operation, leveraging digital twin technology. As a result, they reduced decision times by as much as 80%, while also significantly improving product availability. Because of this, they are much better prepared to meet market challenges, including those resulting from a potential recession. 

The Future Belongs to the Agile and the Resilient

By acting now to invest in your business operations, you can minimize the need for layoffs and other broad cutbacks that companies often resort to in times of economic turmoil. I encourage CFOs to enter this uncertain phase with confidence, prepared to seize opportunities and secure in the knowledge that they’ll be able to quickly and effectively adapt to fast-changing circumstances. 

Crisis doesn’t have to mean confusion. Recession doesn’t need to mean retrenchment.

All recessions end. So, if you use the time now to become more agile and resilient, you will find your company better positioned when we come out on the other side.

  • Get the StrategicCFO360 Briefing

    Sign up today to get weekly access to the latest issues affecting CFOs in every industry

    "*" indicates required fields

    Send me more information about the CFO Peer Network.
    A members-only peer network for CFOs. Members meet both online and in-person a few times a year.
    This field is for validation purposes and should be left unchanged.