Doing business in Australia is becoming increasingly complex. The number of factors decision makers must consider is growing, and external forces continue to present threats and opportunities at every stage.
For enterprises of any size, risk management is a critical process that firms must be give due weight. Understanding the potential threats, with the help of business accounting software, can help firms draw up more effective strategies that account for future obstacles.
Global firms ready to face new risks
In the next few years, innovation will be the most common challenges that businesses around the globe will need to address, as well as compliance and reputation.
Among the 80 per cent of firms that utilise risk sensing methods, 71 per cent use them to identify financial risk, according to a report from Deloitte. In order to effectively identify risks, workplaces must have the staff capable of using analytics and deriving insights.
Deloitte Global’s Governance, Regulatory and Risk Leader Henry Ristuccia stated that long term planning is also essential for managing challenges of any kind.
“A starting point for monitoring strategic risks would be to identify the long term objectives of the organisation – those, that if negatively impacted, would alter the key forces that drive your sector,” he said.
Addressing liquidity risks in a small business
For smaller firms, the financial risks are often more prevalent, as owners have less access to capital than larger businesses and revenues are considerably smaller. These factors put these type of businesses in a critical position to manage the threats to their operating income and capital interests.
Asset management software can be useful in tracking expenditure and business liquidity.
According to Certified Public Accountants (CPA) Australia, small businesses must be able to liquify their assets if they fail to provide funds to creditors. However, many firms fail to do so, therefore facing insolvency.
As reported by the Australian Securities and Investment Commission, there were 2,734 insolvency appointments in the June quarter of this year, an 18.5 per cent increase from the same month in 2014. Businesses that go insolvent will face further credit challenges in the future, so avoiding this event is a key priority.
This is where asset management software can be useful in tracking expenditures and business liquidity. It is important to have a strong understanding of how rapidly your assets can be converted to funds should the need to do so arise. Planning this in advance will help ensure a small business will keep afloat in trying times and survive to see success in the future.