The global recession is on full-swing. Many businesses are losing and some have even closed shop already. With a lot of people losing jobs and money when the once robust financial markets burst, spending is steadily shrinking – putting a lot of pressure on products and services that are not on the priority list of people’s reduced budgets. Managing finance KPIs during financial recession is a challenge that managers have to take up to avoid losing or bankruptcy.

In times of hardships, key performance indicators (KPIs) play vital roles in ensuring that businesses survive since they are the most effective methods in measuring management efficiency. KPIs measure the effectiveness of goals, plans, objectives, implementation strategies, employee performance, and most importantly, management processes.

It is obvious that the main concern of the company is to remain financially viable until the economic recession or the financial recession runs its course. Eventually, if the problem of poor sales persists for some time, companies are forced to cut production to avoid losing money on producing products and services that the consumers have no money to spend on for the present. Employees accept less working days, accept pay cuts, or lose their jobs altogether.

Reducing production to reduce labor costs is, of course, the last resort. Most companies will hold on as long as they can and will apply remedial measures to ease the effects of current financial hardships. Unfortunately, a lot of times, most of them are reduced to implementing rear-guard action for the duration of the crises. Managing finances when revenues are coming at a trickle is very challenging to financial managers and the help of all employees, especially those belonging to the top levels, is crucial. Financial management is essentially an organizational function that all must be concerned with. And KPIs for financial management must be products of decisive actions by management not just to avoid loses, but if possible, overcome difficulties.

Finance units do not exist independent of other departments. In fact, except for companies engaged in providing financial services as their main source of revenues, they mostly play support roles. Financial KPIs in the face of a financial recession in order to be effective must be based on overall company strategies applicable to current situations.

Financial management is about allocation of resources to generate income. In a situation where sales are poor and most of inventories are held in company warehouses or stock rooms and receivables are accumulating, the responsibility of identifying where the available resources of the company must go should be the task of top management. The first thing that the company must do is conduct an in-depth assessment status, identifying strengths and weaknesses, and drawing up appropriate plans and strategies based on the findings. Financial KPIs should be based on these plans.

Cost cutting is given; all expenses that are not necessary must be eliminated. However, determining the necessary expenses and the unnecessary ones can only be done after the plans that address problems are finalized. Without the viable plan of effectively managing finance KPIs during financial recession, it will be very difficult for businesses to survive.