11 July 2023
As a business owner, it’s so important to prioritise the financial stability and security of your company. Growing your business without faith in your risk management will always be a perilous path, with additional dangers emerging from the woodwork as you scale up. So, how can you safeguard your business and make decisions with confidence?
Begin by doing a thorough risk assessment to uncover potential threats to your company’s financial well-being. Internal and external issues like fraud, errors, regulatory compliance, economic volatility, and technical weaknesses should all be considered in your risk assessment. To focus your efforts, assess the likelihood and potential impact of each risk. This is where a professional may save you a lot of time.
Inadequate financial flow can derail any attempt at expansion. In reality, the majority of enterprises that fail within the first year fail due to a lack of available capital.
Regularly monitor and anticipate cashflow to identify potential deficits in advance. Maintain a cash reserve, negotiate favourable payment terms with suppliers, improve credit control, and investigate alternative funding options such as lines of credit or business loans. Cashflow issues can occur for a variety of reasons, including broader economic repercussions beyond your control, but they don’t have to be an issue if you have the skills to monitor and manage them ahead of time. Forecasting and scenario planning should provide you with all you need to make smart decisions around cash.
Any organisation is subject to internal and external fraud, which can result in financial losses and damage to the company’s reputation.
To negate this, it’s important to implement internal controls such as job segregation, frequent account reconciliation, and the use of secure financial systems. Conduct background checks on personnel who handle sensitive financial information, and ensure that directors have completed AML (anti-money laundering) checks. If your technology isn’t assisting you with this, you’re utilising the wrong technology! Telleroo and other platforms include built-in safeguards to assist you avoid fraudulent activity, but it’s also crucial to stay on top of your internal processes. Employees should be educated on fraud prevention and detection, and a whistleblower hotline or reporting mechanism should be considered if necessary.
Non-compliance with financial regulations and legal requirements can lead to penalties, legal issues, and reputational damage.
Stay updated on relevant laws and regulations! HMRC have recently changed their penalty system for VAT submissions, so make sure you understand the new point system in place. Maintain proper documentation of financial transactions, implement internal control procedures, and conduct periodic internal audits. Alternatively, a gap analysis can establish any missing processes. It’s also important to make sure that deadlines and due dates are met.
Establishing internal controls is an ongoing process. You should regularly review and update your controls based on changes in your business, industry regulations, or identified risks. Encourage feedback from employees and stakeholders to identify areas for improvement and ensure the effectiveness of your controls.
Let’s be honest – this probably isn’t what you went into business for. Getting the guidance of a finance expert can provide valuable insights and support while you worry about the parts of the business you love. Safeguard your business today and set the foundation for long-term financial success.