As the world countries are gradually opening up their economies by making up with the Corona, a larger and more hostile challenge of economic recession looms over the world right now. Starting with China which has recorded a historic slump in the first quarter, all the major world economies are experiencing the tremors in their economies.
With a global decline in investment, production, employment, and trade, World Bank estimates a major economic crisis in the next few months, far more terrible than the recession of 2007-09. After ‘Corona’ and ‘COVID-19’ , the terms ‘recession’ and ‘economic crisis’ have become the buzzword today.
But what is the recession? What are its signs? And how outsourcing can help your business during the economic downturn caused by the recession? Read on to know the answers:
What is a recession?
Technically, a country is said to be in a recession when its economic output declines for more than 6 months (two quarters straight). This economic output of a country is measured in terms of growth of GDP and to have a better understanding of the recession we need to know 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 the measurement of the total value of goods and services in a country. It is a sum of total consumer spending, investments, government expenditure, and net exports.
Consumer spending: Consumer spending is the total amount of money spent by a citizen on physical goods like say, mangoes, and services like the car wash etc. This consumer spending makes more than half of GDP for many counties.
Investment: Investments are the total value of money spent on investments like land, buildings, and equipment. Consumer investments like buying a home fall under investment too.
Government expenditure & Net Exports: The amount spent by the government for health, education comes under Govt expenditure and 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 percentage change in GDP (growth rate) expands, the economy is in good shape and everyone is happy. But when the GDP growth rate is negative, it indicates a problem, and a negative GDP growth rate for two 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 the money instead of spending it, consumer spending takes a significant hint. The investment by business and individuals plummet, everyone is on saving spree remember? So both consumer spending and investments take gunshot each.
The decline in consumer spending reduces the demand and companies have to cut back on their output and naturally layoff people to sustain their business. As people are laid off they stop spending on everything except necessities altogether, impacting the business production resulting in 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 cycle continues causing major economic slump and recession.
This recession can range between mild economic contractions in a country for months, to a major economic downturn around the globe that can last for years. But as every country’s economy is severely affected by the COVID-19 pandemic, this possibly could be the most terrible economic recession the world has ever seen.
How businesses can weather this economic downturn?
The silver lining of the impending economic downturn is that businesses today know what they are going to deal with in the near future. Unlike regular economic slowdowns or recessions, this COVID-19 driven recession has sent out a clear message giving ample time for the businesses to take the right measures to keep their business afloat.
Adhering to a lean and flexible working structure, guiding the human and financial resources in the right direction, and cutting overhead costs are some of the measures that can take to weather this looming economic downturn.
And the most simple and effective way to achieve the above is to outsource accounting and bookkeeping to the experts like us at Outsourced Bookkeeping.
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 around the world for years now, it is during the recession their true potential can be leveraged by both small and large 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 a good proposition for businesses? Read on to know:
The most effective way of cost management:
Bookkeeping and accounting services are the most crucial for optimizing the business financials and keeping everything in order. So the department requires huge in-house resources both human and financial which naturally do not align with the revenue the business in making during the recession. When you outsourcing your bookkeeping accounting services, you are only paying for what you are making thus saving a lot 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 in the accounting department, there is a possibility of increased work-load on workforce resulting in decreased productivity. Outsourcing accounting services can take the extra load-off your employees helping them perform their tasks without compromising on quality.
Improved focus on core business:
By outsourcing accounting and bookkeeping services, you can easily direct your human and financial resources towards your core activities that can directly help you improve your revenue generation.
While our experts at Outsourced Bookkeeping can help you with your accounting and bookkeeping services, your full-time employees can focus on more important business functions to help you grow.
High performance and efficiency at a reduced cost:
At Outsourced Bookkeeping, our bookkeeping and accounting experts with the support of advanced financial tools and software deliver the best possible account service at a fraction of cost incurred. Having worked with hundreds of large and small businesses around the world we have developed a gamut of streamlined bookkeeping services that cater to all the requirements 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 all this while delivering accurate highly efficient, and timely accounting services at fraction of cost. With the right outsourcing provider for accounting services for your business, you can easily weather this economic downturn and protect the bottom-line effectively.
So, if you are looking for the right outsourcing provider for your accounting and bookkeeping services, Outsourced Bookkeeping can perfectly help you during this economic down-turn. You can contact us here: https://outsourcedbookeeping.com/