Entrepreneurship Wales: Why Sound Financial Management Practice Is Vital; ADVICE: `Being Able to Demonstrate That Management Is in Control Is Fundamental to Ensuring Success'
Byline: RANDALL EDWARDS
THE need for sound financial management practice is vital, especially when a business is facing difficult trading conditions.
Being able to demonstrate that management is in control is fundamental to ensuring success.
Here are six best practice action points to help tackle the current challenges: 1. Proactively manage stakeholders to stay in control Differing agendas of the various funders mean the initiative has to come from the company itself to achieve the best result.
Re-check the robustness of forecasts, ensuring they are sensitive to potential problems with debt providers.
Focus on burdensome fixed costs and assess the specific vulnerability of the sector to uncertainty.
Prepare contingency plans to avoid covenant breach.
Take any problems to funders early and lead the debate.
2. Look for quick wins Providing an in-house solution not only improves headroom and flexibility but also gives confidence to external and internal stakeholders.
Control discretionary spend or investment; reduce stock, debt and credit levels.
3. Realise under-used assetsLook at the return on assets, assess their true value and use it as a basis for calculating the return generated. …