Planning for the Next Recession

Talk of recession in the United States has been in the air. Whether this actually happens within the next six months or so remains to be seen, but the speculation itself should be a wake-up call for CFOs and controllers to take a close look at their planning processes.

For most businesses, there aren't a lot of silver linings in economic downturns, except this one: If you are prepared, your company stands a better chance of gaining ground on the competition during a downturn than when times are good. Preparing for the bad times is a strategic imperative, especially for the finance organization -- and preparation takes planning, not just budgeting.

Remember that planning and budgeting are separate processes. A plan lays out a company's course of action; the budget translates this plan into the financial resources the business expects to generate and will need to operate. Planning is about things; budgeting is about money.

Planning well means orchestrating how all of the parts of the business connect to the company's strategy and capabilities through a coordinated set of actions. Successful planning helps to achieve business objectives; budgeting well means keeping expenses in check and ensuring that cash is available. Planning is about succeeding; budgeting is about not failing.