ERP – A Smarter Way to Handle Recession

Recession is coming
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Bank of America CEO, Brian Moynihan states the Bank is planning to operate in a recessionary environment in 2023 (CNBC,2023). Bloomberg’s monthly survey also predicts the United States working towards a recession, with declining GDP and the soaring rate of inflation drastically reducing the spending power of consumers and businesses in the U.S. Bloomberg also anticipates unemployment to reach 4.9% by the first quarter of 2024, which itself is not a welcoming sign. On average, investments are projected to decline by 3% and industrial production is expected to deteriorate by 0.7% in 2023.

Recession brings with it, many undesirable impacts on businesses leading to a credit crunch, reduced cash flows, layoffs, struggle in recovering receivables, limited consumption, and declining sales; making it difficult to protect the bottom line. If such a situation persists, it can be devastating not only to organizations, but stakeholders connected to these businesses. The greatest impact of a recession is faced by small and mid-sized businesses (SMB) operating with limited resources and struggling to cut costs and manage in a constrained operating environment. 

Surviving a Recession by Investing in a Right-Fit ERP System

Things are not always pleasing; it is only the strong who survive. This is not only the case for individuals but for businesses as well. In times of recession, the market tends to eliminate less healthy and weak organizations, making way for bigger and better-managed companies to endure and prepare for a better future.

Survival requires organizations and those leading them to have in place appropriate processes and systems that support efficient and cost-effective business operations. Being far-sighted with the ability to remain flexible and adapt to the changing environment also plays a critical role in organizational success during a recession.

A tool that can support businesses to manage better in challenging times is Enterprise Resource Planning (ERP) software which automates routine and repetitive tasks and streamlines business functions. A cloud ERP business management tool, such as the ERP system developed and sold by us is one such software targeted specifically at small and medium-sized business entities. ERPs offer many functionalities and have noted benefits. For instance, an ERP system like the IBB ERP helps smooth business operations by providing real-time data access 24/7 from anywhere. It is an effective and efficient way to have a 360° view of business activities across the value chain. Additionally, an ERP system supports smart decision-making by enabling faster and more accurate data collection and analysis across business operations. These aspects are all key when preparing for and operating in a recession.

7 Tips to Battle Through a Recession

Let’s learn how to stand out from the crowd and operate successfully during a recession.

  1. Comprehend the valuable assets of the business

It is important to segregate business assets according to the benefit they generate. Some business functions are not as essential as others. Non-essential functions may go below the radar during good times but during times of recession, the management must critically analyze business functions and restructure organizations to operate optimally in a low-cost environment. ERP systems help businesses identify cost and profit centers and more effective ways of handling processes, thereby leading to a lean organizational structure that reaps higher rewards.

  1. Be reliant on variable costs

Overheads play an important role in successful organizations. Businesses should always work towards minimizing overhead costs. For an instance, outsourcing employees on a contractual basis rather than hiring them full-time for non-essential work can be one good option. With the aid of a good ERP system, management would have access to accurate data that allows for effective cost-benefit analysis enabling a business to make sound decisions during unfavorable times.

  1. Analyze your financial strength

Pending payments or debts may not be a matter of serious concern when things are going well but during a recession, this could add to the burdens of operating successfully. A business needs to have a clear picture of its debts and receivables to decide which receivables need to be recovered on priority and which debts need to be paid off, thereby ensuring a positive bottom line. A cloud-based ERP system provides a business with accurate and detailed financial analysis supporting strategic decision-making and the re-evaluation of budgets.

  1. Appreciate efficiency

Recession brings inflation resulting in cost increases in goods and services and labor. Most organizations work towards minimizing layoffs by first analyzing other areas for cost reductions. However, a labor-intensive business or an organization that has over time increased its labor force to complete routine tasks as opposed to investing in technology may not be able to accommodate labor retention, leading to mass layoffs. To keep the wheel turning businesses need to become more reliant on automated processes instead of manual labor. An ERP is one such solution, offering a complete solution that automates workflows, tracks activities, and generates personalized reports for streamlines order management, warehousing, invoicing, etc.

  1. Never put all efforts into a single place

Having a diverse portfolio with multiple sources and options for revenue generation and supply chain workflow is the right way to operate for a business to remain viable in the future. Depending on a single buyer or supplier can be threatening in times when businesses strive for survival. As every business suffers during an economic downturn, the probability that buyers are unable to meet payment terms or suppliers are unable to supply required quantities of goods and services increases. The right ERP system is smart enough to identify the trends and behavior of such stakeholders and support an organization to make timely procurement and sales decisions.

  1. Do not overstock

The higher the inventory, the greater the costs. Cash flow is limited, storage costs increase, and profits can decline. During a recession, most businesses will face declining sales and a shortage of liquid cash. Having an optimal inventory system would support the ability of a company to maintain liquidity. An ERP solution that incorporates an inventory management module will support businesses to proactively control inventory levels and have adequate stocks to supply current needs and future projections.

  1. Keep communication lines open

Recession is worrying but with challenge comes opportunity. Each team member is important and needs to be prepared to face emerging challenges. This is only possible when all employees from the Board of Directors to the executive level are aware of external market and economic developments. Thus, open and clear communications are vital for sustainable organizational success as it garners confidence in team members. A cloud ERP system is well equipped to keep peers connected around the globe where they can access all shared information.


IBB-ERP is an All-In-One Solution!

Our Cloud-based ERP solution supports organizations to streamline and manage their various business functions optimally. Our ERP system is an ideal solution for small and medium-sized businesses from different industries. IBB-ERP provides seamless integration of data from end to end. Business automation is no big deal as IBB-ERP provides a turnkey product that includes inventory management, order management, warehouse management, picker management, point of sale system, delivery management, DSD management, report generation, and customer relationship management modules integrated within one system.

Customer privacy, data security, and online security are critical aspects that have been included in the ERP system design and operation.

Interested in managing your business functions optimally in an upcoming recessionary environment? Just schedule a demo with us to learn more about our ERP product.

IBB-ERP can add value to your business. Whether the economy is at a boom, or times are challenging, we provide a superior value-for-money solution for your business.

For other inquiries, feel free to write us.



  • (2023 January). Brian Moynihan says Bank of America expects ‘mild recession’ and is preparing for worse. Website.
  • (2022 December). Economists Place 70% Chance for US Recession in 2023. Website.