Step 1 — prioritise cash over everything

In a recession, liquidity beats growth. The goal shifts from expanding to enduring: preserve cash, protect the buffer, and avoid commitments that tie up money you might need. A profitable-but-illiquid business is far more fragile in a downturn than a slightly-less-profitable but cash-rich one. Reset your priorities around survival first. See how a cash buffer protects your business.

Step 2 — tighten credit control hard

Downturns make customers pay slower and raise the risk of bad debts, so tighten up. Re-check the credit of key customers, chase overdue invoices harder and earlier, cut credit limits where risk has risen, and be quicker to stop supply on non-payers. Your debtor days will fight to rise; pushing back on them protects your cash. See how to chase overdue invoices.

Step 3 — cut costs early and carefully

Trim the cost base before you are forced to, protecting the spending that generates revenue. Early, measured cuts are far less damaging than late, panicked ones. Focus on discretionary and fixed overheads rather than the activity that keeps income flowing. See how to cut costs without hurting revenue.

Step 4 — watch the numbers weekly

In stable times a monthly review may do; in a downturn, watch cash weekly. A rolling 13-week forecast, updated every week, catches trouble while it is still small. The warning signs appear faster in a recession, so you need to be looking more often.

Step 5 — secure headroom before you need it

Credit tightens in a downturn, so arrange facilities while your figures are strong and lenders are willing — not once the squeeze has hit your numbers. Standby headroom secured early is cheap insurance against a deepening downturn.

Credicorp lends to your company, not to you personally, and takes no personal guarantee. See business loans or apply online.