In
the current economic climate, managing a credit rating and obtaining finance is
more important and difficult than ever. It is vital that companies
are provided with the right information from the market and credit rating
agencies, to ensure their credit and risk evaluation shows them in the best
light.
According to the ICAEW report, Reporting business risks, the demand for better risk reporting has grown in recent years. This does not mean we need more legislation or regulation; most businesses are already struggling to keep up with the existing regulations, it is more a matter of education. Many company Directors are well aware of the issues and are managing them as effectively as possible, but for those who are not sure what they should be doing, here are Ward Williams’ 3 key points on managing risk information:
Information availability
If you are looking for investors or trying to manage your credit rating, then go direct to the source; approach the agencies, and offer to provide more up to date financial information or trade references. The agencies tend to have processes for dealing with these requests. This is bound to help them better asses your company. The same goes for investors. You may not know who they are yet, but if you are trying to attract or obtain funding, then make it easy for them to get the information they need. This could be as simple as adding an ‘Investors info request’ option to your website and having an information pack ready to send out.
Relevant and helpful information
Review the information you are proving to ensure it is relevant to the intended user. There should be qualitative and quantitative data, headline figures and sector beak downs but also commentary where the figures only show part of the story. Relate the risks to your business model, putting them in context makes them much easier to understand and thus assess.
Keep it current
Stop thinking in accounting cycles! Your business changes and grows throughout the year. At Ward Williams we recommend sitting down a couple of times a year and reviewing your business risks. Look back; did you identify the risks for the previous period correctly? Were there some issues that you overlooked? Did you manage the risk as well as intended/expected? Could you do something differently going forward? Can you learn and evolve your business to better deal or cope with risk?
The risk profile of your company and how it is perceived not only affects your ability to obtain funding, but also affects a number of wider issues, including: Negotiating credit terms, maintaining/increasing your company credit rating, providing employees with some job security, achieving a higher price if selling and negotiating better prices if purchasing. Your company risk profile has a huge impact on your business, so it is vital you are managing it as effectively as possible.
According to the ICAEW report, Reporting business risks, the demand for better risk reporting has grown in recent years. This does not mean we need more legislation or regulation; most businesses are already struggling to keep up with the existing regulations, it is more a matter of education. Many company Directors are well aware of the issues and are managing them as effectively as possible, but for those who are not sure what they should be doing, here are Ward Williams’ 3 key points on managing risk information:
Information availability
If you are looking for investors or trying to manage your credit rating, then go direct to the source; approach the agencies, and offer to provide more up to date financial information or trade references. The agencies tend to have processes for dealing with these requests. This is bound to help them better asses your company. The same goes for investors. You may not know who they are yet, but if you are trying to attract or obtain funding, then make it easy for them to get the information they need. This could be as simple as adding an ‘Investors info request’ option to your website and having an information pack ready to send out.
Relevant and helpful information
Review the information you are proving to ensure it is relevant to the intended user. There should be qualitative and quantitative data, headline figures and sector beak downs but also commentary where the figures only show part of the story. Relate the risks to your business model, putting them in context makes them much easier to understand and thus assess.
Keep it current
Stop thinking in accounting cycles! Your business changes and grows throughout the year. At Ward Williams we recommend sitting down a couple of times a year and reviewing your business risks. Look back; did you identify the risks for the previous period correctly? Were there some issues that you overlooked? Did you manage the risk as well as intended/expected? Could you do something differently going forward? Can you learn and evolve your business to better deal or cope with risk?
The risk profile of your company and how it is perceived not only affects your ability to obtain funding, but also affects a number of wider issues, including: Negotiating credit terms, maintaining/increasing your company credit rating, providing employees with some job security, achieving a higher price if selling and negotiating better prices if purchasing. Your company risk profile has a huge impact on your business, so it is vital you are managing it as effectively as possible.
For
more information please visit www.wardwilliams.co.uk
Keep in touch, Part 2 of this series:
External Risk Information coming soon...
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