The Panics of 1820, 1837, 1857, 1877, and 1893. The Great Depression of the 1930s. The present.

Economic crisis keeps playing out under all-too-similar scenarios that revolve around speculation and greed. CFOs can count on it as one of the few certainties of life, along with death and taxes. We'll come out of this one -- we always do -- but in the meantime (and nobody will speculate just how long that time will be), there are actions that finance executives can take to help lead their companies into a brighter era and maybe even help them to become better, stronger organizations in the process.

The challenges and opportunities facing finance today fall into three buckets: cash, costs, and confidence. Ninety-six percent of CFOs surveyed by Deloitte Consulting LLP say that during this year they will focus on maximizing cash flows and improving investor confidence. Consulting with and keeping providers of capital well informed of company plans is also a major priority this year. The survey points to a major squeeze on employment levels and investments in 2009; 90 percent of CFOs plan to reduce operating costs, and 77 percent plan to reduce capital spending.

The first place to look for cost savings is payroll, and many companies have already severely slashed their workforce. CFOs must be strategic about where to cut back, according to Jeff Schwartz, principal, human capital, Deloitte Consulting LLP. "Understand first of all where the most valuable employees in the company are," he says. "And finance should remind HR that this is a good market in which to obtain critical talent. But the downside is that your stars are out in the market, too. Poaching goes on in critical skill areas, including finance. It almost runs counter to the notion that when companies are trying to cut back, they need to find ways to create strong relationships with top performers."

Cost cuts are often well justified. "In the past seven or eight years, a lot of companies got a little bit fat during good times, so there are a lot of places where people are looking to cut costs," says Sanford Cockrell III, national managing partner, Deloitte’s U.S. CFO Program. "This crisis has created an opportunity for CFOs to do some things they've been wanting to do but have seen meet resistance because of flush times, such as implementing either very specific or enterprise-wide cost-cutting programs."

Businesses are focusing on finding opportunities for improvement in procurement, receivables, and payables. "Companies are reevaluating accounts payable and receivable policies and looking at customer policies. CFOs are putting on a different hat if they're dependent on downstream supply chains," says Cockrell. "If their suppliers don't have the ability to access the credit they need, some organizations actually have to act like banks to keep strategic suppliers in business."

RMJM, headquartered in Edinburgh, Scotland, is one of the world's largest international architectural and design firms. It has tightened its cash processes substantially, according to Richard Bailes, divisional CFO, based in the U.S. "We're more proactive internally on the receivables side, and when we're expecting a payment in, say, 30 days, we have someone contact the client about a week in advance to ask if they're ready to make the payment and what form the payment will take. There's much more detail at this level now to make cash flow and cash conversion processes more efficient."

To meet new cash flow goals, Bailes has spread more responsibility among other members of the finance team. "Project managers now sit alongside project accountants, who have much more accountability and responsibility for the full cycle of billing and receiving cash," he says. "We find, as a result, that there is a lot more weekly dialog and formal weekly discussion to make sure that all of our ducks are in a row and that there's no duplication of effort."

At Armstrong International, a global, family-owned company that provides energy management solutions, CFO Steve Gibson's commitment to spreading the cash is a concept is so strong that he uses money as a visual aid. "Most people think that profits are more important than cash," says CEO David Armstrong, "but not everybody has a finance background. Steve is constantly reminding people that cash drives the enterprise. In fact, at one time we had been losing money on a venture every year for about six years. He brought the executive team together and put a $100 bill in the middle of the table. He told them that this was how much the company was losing every minute on that venture and started to talk about ways to control expenses. They kept looking at that $100 bill and doing the math. The moral is that this was a very visible, dramatic way to drive home the point."

Seize the Day

According to the Deloitte survey, access to capital as banks hunker down and tighten lending will continue to be top-of-mind for CFOs throughout the year. In response, companies are reducing debt and risk, selling noncore assets, and scaling back stock buybacks and dividends. Seventy percent of CFOs plan to reduce or hedge risk in the balance sheet or in the business, and 56 percent plan to reduce debt levels. And dividends, long a sacred cow, are more likely than ever before to be cut.

"There's been a reengineering, so to speak, of the way in which capital can flow around the world, and private equity broadly, including sovereign wealth and hedge funds, will play a significant part in the way that capital will begin to flow again," says Cockrell. "These investors will increasingly occupy the seats at the table previously occupied by commercial bankers. The structure and terms and conditions around the flow of capital and the instruments associated with it will be much different than what CFOs have seen before. Even though they may be structured as debt instruments, there will probably be more equity-like features, since that's what these providers of capital are used to doing. There will be a steep learning curve for CFOs and treasurers who have not been in that market before."

Businesses that incur the lowest possible capital costs will be the victors when the crisis subsides. "Companies that will fare better than their peers coming out of this recession are going to spend a lot of time thinking about their costs of capital, which in all likelihood will require a new capital mix; the balance sheet they had going into this crisis will not look like the balance sheet going out," says Cockrell "In any given industry, companies that from a strategic standpoint really engineer their balance sheet so that overall they have the lowest cost of capital in their class will be positioned to grow faster and do much more as everybody comes out of this recession."

Well-positioned businesses will be able to seek out strategic assets. The companies that will differentiate themselves aren't the ones that are always watching their nickels right now, but rather those that are strategic about what they're going to look like two years from now. Armstrong International CFO Gibson says that while the company has focused on eliminating anything that isn't directly value-added, it's investing in new operations in India. "We don't want to pull back on strategic growth even at this period of time when we have to be realistic about our resources. In December, we made an acquisition and increased our unsecured line of credit. We're happy about this because we're trying to balance current conditions with where we see opportunities to be stronger."

It takes confidence to make acquisitions during a recession, when companies fear taking greater risk onto their balance sheets even when they recognize opportunity. First movers, those companies that move proactively to take advantage of market conditions to improve their competitive position and accelerate activities that will yield short-term gains, will be well-positioned for long-term success. A Hackett Group report shows that first movers in a recession have internalized and adopted the following key principles.

• Act quickly: Identify quick-win projects that can be implemented within four months, are revenue-neutral, and can show a positive return within six months.
• Prioritize opportunities: Track performance at both the function and process levels, which helps to understand and prioritize where the most aggressive cost reductions can be made with the least risk of harming productivity or quality.
• Leverage strengths: Develop action plans that leverage best practices and play to their strengths and core competencies.
• Set a clear path: Whether by themselves or using outside help, they benchmark their current performance levels and define road maps to get the organization to the desired performance level.
• Maintain talent: Tap high-potential associates for involvement in recessionary response initiatives, providing them with new challenges and growth opportunities both to foster breakthrough thinking and cement loyalty at a time when top performers might be considering a jump to another company.

For finance executives, the cultural and employee-related issues may be the hardest to wrap their heads around. "Without buy-in, the decisions on where to cut and where to invest will seem arbitrary and won't be understood," says Ed Boswell, CEO of The Forum Corp. "To be a truly effective leader during times like these, you have to frame an agenda and meet with key stakeholders to gain support and build commitment to overarching goals and values. The risk of not doing this is that people will do what comes naturally -- protect their turf, fear the worst, let their imaginations fill in the blanks left by a lack of information. A leader's most potent action is to communicate the strategy and engage their staff."

No matter how well-executed the business strategy, without the people required to drive growth when the economy recovers, companies will lose whatever competitive edge they enjoyed before the hard times hit.