I’ve been assistant CFO at Hy-Tek Material Handling for just over eight years now. Generally, I spend most of my time working on month-in-close reports, overlooking the accounts receivable department and preparing various reports for our different departments. I also handle the filing of our sales tax returns—over 30 states worth. However, just over a year ago, our company—and my job—began to change.
A Recession Hits
I, along with everyone else at the company, knew a slowdown was coming. However, it wasn’t until August of last year when we began to realize how serious it was going to be. We experienced record sales during the first half of 2008; but by the fall, sales had dropped off a cliff.
Immediately, we began to look at what we could do to trim expenses while still trying to grow our bottom line. My part of the process involved lots of research and reporting. I put most of my focus on receivables—I looked more at the creditworthiness of our customers, becoming more proactive in the process. One of the solutions I came up with involved getting creative with our terms. While I didn’t really want to turn away customers, I had to limit risk to the company. I found that the best way to do this is through progress billing—I request 30 percent down, 60 percent upon delivery and a 10 percent retainer. So far it has been very effective.
Making Cuts Without Leaving a Scar
One of the hardest things a company has to do during a recession is decide where to make cuts. I was part of the team that decided what our strategy would be and, unfortunately, it involved two rounds of layoffs and a cut in benefits for those who remained. Not only is the human aspect of these decisions difficult, but you also need to be careful not to make your cuts too deep. If not handled carefully, cuts can leave you with a paranoid and less effective work force. Also, if you cut too much, you won’t be adequately positioned to gain market share during the recovery. There’s no magic formula to know how much to cut, you just have to rely on your experience and your judgment.
Recently, Ben Bernanke said that the recession was over and I hope he’s right. As a company, we’re going to come out of this recession leaner and more efficient. Moving forward, it will be up to me and the rest of our management to make sure that we continue to make the sound financial decisions that allowed us to come through this crisis in one piece.
|Meet the Author
Brian Schepman is the assistant CFO at Hy-Tek Material Handling, located in Columbus OH, and on the Web at www.hy-tek.net