As the world countries are gradually opening up their economies by making up with the Corona, a bigger and more hostile challenge of economic recession looms over the planet immediately. Starting with China which has recorded a historic slump within the half-moon, all the main world economies are experiencing the tremors in their economies.
With a worldwide decline in investment, production, employment, and trade, International Bank for Reconstruction and Development estimates a serious depression within the next few months, much more terrible than the recession of 2007-09. After ‘Corona’ and ‘COVID-19’, the terms ‘recession’ and ‘economic crisis’ became the buzzword today.
But what’s the recession? What are its signs? And the way outsourcing can help your business during the economic downturn caused by the recession? Read on to understand the answers:
What is a recession?
Technically, a rustic is claimed to be during a recession when its economic output declines for quite 6 months (two quarters straight). This economic output of a rustic is measured in terms of growth of GDP and to possess a far better understanding of the recession we’d like to understand about the GDP and its growth.
Gross Domestic Product & Recession:
The size of a country’s economy is measured in terms of GDP. And GDP is that the measurement of the entire value of products and services during a country. It’s a sum of total consumer spending, investments, government expenditure, and net exports.
Consumer spending: Consumer spending is that the total amount of cash spent by a citizen on physical goods like say, mangoes, and services just like the car wash etc. This consumer spending makes quite half GDP for several counties.
Investment: Investments are the entire value of cash spent on investments like land, buildings, and equipment. Consumer investments like buying a home fall into investment too.
Government expenditure & Net Exports: the quantity spent by the govt for health, education comes under Govt expenditure and therefore the value of net exports (exports – imports) is another factor keyed-in for GDP calculations.
And the growth of GDP is how a country’s economic health is measured. When the share change in GDP (growth rate) expands, the economy is in fine condition and everybody is happy. But when the GDP rate of growth is negative, it indicates a drag , and a negative GDP rate of growth for 2 straight quarters is termed technical as a recession.
The Impending Economic Downturn of COVID-19:
As the world countries are hit by the Corona pandemic, the lockdown imposed by the governments has stalled the economy for months now. As everyone starts to save lots of the cash rather than spending it, consumer spending takes a big hint. The investment by business and individuals plummet, most are on saving spree remember? So both consumer spending and investments take gunshot each.
The decline in consumer spending reduces the demand and corporations need to crop on their output and naturally layoff people to sustain their Accounting services for small business. As people are laid off they stop spending on everything except necessities altogether, impacting the business production leading to layoffs.
As people spend less, business output reduces and employees are laid off and as people are laid off, people have less money in their pockets and spend less: this vicious circle continues causing major economic slump and recession.
This recession can range between mild economic contractions during a country for months, to a serious economic downturn round the globe which will last for years. But as every country’s economy is severely suffering from the COVID-19 pandemic, this possibly might be the foremost terrible economic recession the planet has ever seen.
How businesses can weather this economic downturn?
The bright side of the approaching economic downturn is that companies today know what they’re getting to affect within the near future. Unlike regular economic slowdowns or recessions, this COVID-19 driven recession has sent out a transparent message giving ample time for the companies to require the proper measures to stay their business afloat.
Adhering to a lean and versatile working structure, guiding the human and financial resources within the right direction, and cutting overhead costs are a number of the measures which will fancy weather this looming economic downturn.
And the most straightforward and effective thanks to achieve the above is to outsource accounting and bookkeeping to the experts like us at Kayabooks.
How outsourcing can help your business during the economic downturn caused by the recession?
Though non-core business functions and requirements like Accounting, HR, and Marketing are being outsourced round the world for years now, it’s during the recession their true potential are often leveraged by both small and enormous businesses. Especially outsourcing accounting services has always been a time tested solution adopted by the business during the recession.
But what makes outsourced accounting services such an honest proposition for businesses? Read on to know:
The most effective way of cost management:
Bookkeeping and accounting services are the foremost crucial for optimizing the business financials and keeping everything so as. Therefore the department requires huge in-house resources both human and financial which naturally don’t align with the revenue the business in making during the recession. Once you outsourcing your bookkeeping accounting services, you’re only paying for what you’re making thus saving tons on the time and money spent on your in-house team.
Reduces work-load on retained employees:
While you adhere to lean employee structure with the reduced workforce within the accounting department, there’s an opportunity of increased work-load on workforce leading to decreased productivity. Outsourcing accounting services can take the additional load-off your employees helping them perform their tasks without compromising on quality.
Improved specialise in core business:
By outsourcing accounting and bookkeeping services, you’ll easily direct your human and financial resources towards your core activities which will directly assist you improve your revenue generation.
While our experts at Kayabooks can assist you together with your accounting and bookkeeping services, your full-time employees can specialise in more important business functions to assist you grow.
High performance and efficiency at a reduced cost:
At Kayabooks, our bookkeeping and accounting experts with the support of advanced financial tools and software deliver the simplest possible account service at a fraction of cost incurred. Having worked with many large and small businesses round the world we’ve developed a gamut of streamlined Bookkeeping services for small business that cater to all or any the wants of the business with enhanced efficiency at a reduced cost.
Thus, Outsourcing your bookkeeping services during the wake of this economic downturn and possible recession can make your flexible, fill your resource gaps, reduce your financial burden, and every one this while delivering accurate highly efficient, and timely accounting services at fraction of cost. With the proper outsourcing provider for accounting services for your business, you’ll easily weather this economic downturn and protect the bottom-line effectively.