The global financial crisis is unprecedented and the end is nowhere in sight. Major financial institutions have been wiped off the map. Others are having to be bailed out by governments. The spectre of recession looms across the world. 

The lazy hazy days of virtually uninterrupted prosperity, low interest rates and a relatively relaxed credit climate of the last decade are well and truly over. This benign decade saw the fundamental rules of financial management being thrown out the window or ignored except by those who had been through the baptism of fire of the late 80s and early 90s in Australia. Remember those interesting times? Interest rates at stratospheric levels; property values plunging through the floor triggering LVR covenants for many borrowers; two of the four pillars of the banking system in trouble.

Right now liquidity is tight and can expect to remain tight for the forseeable future. Risk appetite is signficantly diminished. The fundamentals are back - in a big way. [At In-Context Finance, we believe they should never have gone out the window anyway.]

On the bright side, there will be opportunities amidst the carnage. Businesses with strong balance sheets, high quality earnings and cash flows will be well-positioned to take advantage of these opportunities and actually grow through these difficult times.  

It's never too late to implement sound strategic business and financial management practices. Indeed, these will be critical to ensure survival through these "interesting times". 

Financial matters that should be given consideration include:

• is your debt/capital structure appropriate to your business?
• how will you fund growth of your business? Have you done your cash flow forecasts? Have you stress-tested them?
• does your financier understand your business? Uncertainty generates fear and the last thing you need in these testing times is your financier being jumpy as a result of lack of knowledge/understanding about your business' financial position and outlook.
• quality of your financier? [Yes, this works both ways: if your financier is in trouble, you are likely to have problems as well.]
• should you spread your risk between financiers? This is only practical - and absolutely prudent - if your business has significant borrowings

Contact us to discuss how our strategic business and financial management services can add value to your business.

If you are in trouble with your financier, contact us to find out how we can help.