With energy prices surging, credit markets frozen and the economy slowing, CPAs are getting more questions and listening to more client concerns than ever before. Fortunately, they have answers.

In fact, CPAs have plenty of answers. Good answers.

A couple months ago, we reported some of the best CPA ideas for small businesses heading into a recession (see “Battle the Recession Blues With Some Bright Ideas” and “Recession Tips From the Pros”). And the answers and good ideas haven’t stopped rolling in.

“Many clients are noticing a growing concern among their customers, and, consequently, are beginning to prepare for tougher times,” says Kevin Ryan, a partner in the Philadelphia office of Citrin Cooperman.

“Our clients are asking us what they should be doing now to prepare for an economy that goes south,” Ryan says. “As CPAs, we’re always worried about volatility in the marketplace, so the advice we provide now is the advice we’ve provided to businesses all along. Look at Sept. 11. Many companies weren’t prepared when the economy sank then, and, frankly, many companies didn’t make it.” Watch Rick’s video snack on Four Keys
to Success.

There are 13 steps owners of privately-held businesses can take now, to prepare for a sluggish economy.

Ryan starts with:

1. Review your budget on a monthly basis. Keeping track of expenses, sales, margins, cash-flow and other indicators allows business owners to make informed decisions in an economy that can be shifting relatively quickly.
2. Watch receivables closely. Receivables can be an indicator of how hard a business’s clients are being hit by an economic downturn, and could provide an early warning that clients are about to cut back on their purchasing.
3. Evaluate all expenses. In a strong economy, business owners may neglect to review — or re-price — the services and supplies they purchase. Review the services to see which ones are no longer needed, and research prices and offerings from different vendors to see if there are cost-effective alternatives.

Here are a few more suggestions from John Straccamore, a partner at Bederson & Co. in West Orange, N.J:

4. Reduce your inventory levels
5. Review your medical plans (for example, reduce benefits or increase employee medical contributions)
6. Reduce your energy consumption through conservation and efficiency

Donald J. Snyder, a partner at Green Hasson & Janks LLP, in Los Angeles, Calif., has a great idea and a real-life example:

7. Lease extensions — Contact your leasing company to explore ways to extend your leases or restructure your payments.

Example: I have an entertainment industry client who found making the $100,000/month lease payments problematic during the writer’s strike. I contacted the client’s leasing company and convinced it to defer the principal portion of the lease payments. My client ended up only having to pay sales tax, reducing the monthly lease payments to $50,000/month. This one phone call basically provided free financing.

Fernando Gomez, CPA, Jackson Heights, N.Y., suggests:

8. Consider increasing the insurance deductible, where permitted, on all types of business insurance in order to reduce the premiums paid.

Belinda Fuchs, CPA, Own Your Money LLC, in Boston, Mass.:

9. Systemize, systemize, systemize. More money is literally thrown away every day as small businesses often self-impose customization on every process. Instead, standardize processes for customized results. If you are worried it can’t be done, look at successful franchises such as McDonald’s or Starbucks, and read Michael Gerber’s book The E-Myth Revisited, as a resource to understanding the secrets of why most small businesses don’t work and what you can do about it.
10. Carpe diem. Open your eyes to how the current state of the economy can provide an additional need for your business. Change your outlook and be careful not to believe the media hype. For instance, a financial advisor can choose to see that people may have less money to invest or, instead, can address the tremendous need for people to have a trusted resource to safeguard and grow their savings. The opportunities are everywhere.

Alyssa Lebovic, partner at Keller & Lebovic CPAs, Fair Lawn, N.J.:

11. Ask all new customers where they heard about you, so that you can minimize your advertising costs to only those that are effective.
12. Especially when profit margins are small to begin with, consider tacking on fuel surcharges or past due interest charges. You can’t afford for these additional costs to eat into your profits.
13. Tighten up your credit and collection policies to minimize outstanding accounts receivable. Don’t become your customers’ banker.

And, finally, above all — never compromise quality to save costs.

GOT A GOOD IDEA? Share it with your colleagues. Send us your best advice for small business owners, or for accounting firms. And take a well earned break. Watch Rick’s timely video snacks for CPAs.

COMMENTS: Questions, rants or raves? Write Rick Telberg or Watch him.

Copyright © 2008 CPA Trendlines/BSG LLC. All Rights Reserved. Used by Permission. First published by the AICPA.