Early Warning Signs
One of the biggest challenges business owners face is interpreting data and identifying indicators that allows them to make informed decisions.
One important area for any business is looking at the financial and non-financial early warning signs of financial problems and then proactively managing these issues before they manifest into something more serious.
The table below gives some idea of the issues to look out for and it is worth noting that many non-financial signs are of potential financial problems at a later date. Early identification and intervention are key actions to take.
It may be worthwhile incorporating an assessment of your position relative to these factors, at least annually, as part of your business planning / needs analysis process.
Without timely attention to identified problems, you may find that your financier has the systems and processes to pick up on some or all of these issues. This could lead to being referred to your financier’s asset management unit for more intensive credit risk oversight. Therefore early intervention is key!
A well run businesses should be looking at the current circumstances to grow their business and in the current climate need to be keeping a careful eye on their financial position and interpret and adapt to changing market conditions accordingly.