Ever since 2012, corporate profits in the US has been mostly going down. That said, it did make a slight rebound in the second quarter of 2019 based on the estimate from the Bureau of economic analysis.
One of the reasons why corporate profits are carefully watched is because historically, downward trends in corporate profits signal an impending recession or coincide with a recession.
When corporate profits are down, businesses are more cautious and try to cut back on certain investments and hiring. This will of course lead to even sharper declines in margins.
As the third quarter of 2019 closed, we saw a very cautious behavior in many decision makers. Many businesses have started to wind down on technological investments and additional hiring.
Additionally, when we look at the US statistics, business investment was down 1% in comparison to what is was for the same period in 2018. September also saw consumer confidence decline the most.
Manufacturing fell to its lowest level in the last 10 years making everyone slightly nervous. When looking at the Fed, they expect GDP to be at 2.2% which is below current administration´s target of 3%.
It certainly is not all bad news.
The US still displays robust retail sales exceeding forecasts coupled with high levels of employment and disposable income.
All that taken into consideration, now is as good time as any for most businesses to have a serious look at their ability to do financial planning and budgeting, forecasting as well as reporting and analysis.
While it is understandable that many businesses nowadays are very careful in buying new technology when there is so much uncertainty, the reality is, these businesses are better off making sure that while times are still pretty good, they take good control of the finances of the business.
They need to beef up on transparency, accountability, pace of accounting, and agility of the business. These can only be done if the business has good control of their financial health.
Investing in a reliable financial planning software and financial forecasting software is a good place to start. It is worth mentioning that what makes a financial planning software good is not only its ability to automate repetitive tasks because automating something inefficient rarely leads to anything good. The financial planning software must first and foremost streamline and optimize the entire accounting process before it automates it.
Once optimization of the accounting process is achieved, automation will follow quite easily which will then improve the pace and execution of accounting.
If you are uncertain where or how to start, check out Performance Canvas Financials at www.performancecanvas.com. It is a reliable, robust, and good value for money financial planning software used by best-in-class organizations in the US, Scandinavia, UK, NZ and Australia. You can even load your own financial data as you do a free trial of this software.
No fees, no commitment during trial period. Nothing to lose and everything to gain.