Member’s Dashboard My Account Financial Risks Completed by: First Name Text Last Name Email 1. Does your business have sufficient funding to enable it to remain a viable going concern? Yes, absolutely. Our shareholders are all in a position to inject further capital should this be needed to ensure the business remains adequately funded to support operations and growth. Yes, defintely. We have a positive cash flow and have formalised credit lines with our bank and key suppliers should we need to make use of them at short notice. Yes, our business is sufficiently profitable and it should be relatively easy for us to raise additional capital or funding when the time comes. No, not really. We have not approached our bank or suppliers for credit and are trying to manage the business from within the cash resources available. No, we do not have cash resources or any alternative formalised funding or credit lines in place. No, we have had a few credit judgments against us in the past and this has severely hampered our ability to get credit or raise funding. No, not at all. Due to our weak financial position and lack of liquidity we are not able to get any credit or funding. 2. Do you have revenues or income at risk? No, not at all. We are a price maker and our business continues to grow revenue, volumes and profitable new business. No, but as a price taker we are just managing to maintain revenue growth in line with inflation. Yes, to a degree. Our revenues are continually under threat and shrinking due to ever increasing competition and aggressive pricing. Yes, to a large degree. A number of our contracts are likely to be terminated or reduced in size which will severely impact our revenue. Yes, our turnover has dropped to such a level that we are no longer able to cover our basic operating costs. Yes, definitely. we have chased turnover and a potential large bad debt could have a major impact on our income and business. 3. Are your profit margins consistent and not under pressure? Yes, absolutely. Our expenses are well under control and we are able to achieve a consistent gross and net margin on all our sales. Yes, to a large degree. However we are being forced to cut the mark-up on certain lines and products to our major customers, but all sales are still profitable. Yes, but our costs are largely fixed and we rely on volumes to ensure we remain profitable. No, competition is fierce and as we are largely a price taker, we are forced to price in line with our competitors often at very low margins. No, while our gross profit has remained consistent, our operating expenses and salary bill have grown at such a rate that we are now making losses. No, not at all. New online entrants to the market have seen our turnover drop and our mark-up being significantly eroded and we have also had to discontinue certain product lines. 4. Is your business/organisation liquid and a positive generator of cash? Yes, absolutely. Our cash flow is very strong and positive and we have been able to build up significant cash balances over the years. Yes, we run the business on a strictly cash basis and are able to readily meet all liabilities from our cash flow. Yes, to a degree. We focus on cash flow and although margins are under pressure, we have been able to remain cash positive. Yes, to a lesser degree. We have been forced to reduce stock levels and credit extension to customers in order to rectify our cash flow. No, not really. Higher cash discounts are being offered, and while this has had an overall negative effect on revenue and profitability, the business is now more liquid. No, due to weak cash flow and low profitability, our overdraft exposure hardly fluctuates and we are forced to service far more interest than previously. No, not at all. Our cash resources are rapidly disappearing as we continue to fund operating losses. 5. Are you able to service the interest on your overdraft or loans and comfortably meet your required debt, creditor and salary/wage repayments and obligations? Yes, absolutely. We are comfortably able to service the interest on all loans and repay our debt and liabilities as and when they fall due from our cash flow. Yes, we have credit lines and limits in place, but due to the erratic nature of our cash flow, these are regularly utilised and often exceeded. Yes, to a degree. As our cash flow has deteriorated we are being required to pay an ever increasing amount of interest on our debt which has worsened our cash flow further. No, not really. Unless we can increase or renew our credit facilities/credit lines we will not be in a position to repay our existing debt and other liabilities as and when they fall due. No, we continually receive final demand notices from our major creditors and are trying to keep our creditors happy by at least paying part of the amounts due. No, not at all. We are in arrears on a number of key credit facilities, notably around leases and instalment sale arrangements and have received final letters of demand in this regard. 6. Do your assets comfortably exceed your liabilities? Yes, absolutely. Our current assets comfortably cover our current liabilities and we are easily able to meet all our obligations as and when they fall due from our cash flow. Yes, while our business is solvent and our assets comfortably exceed our liabilities, we have had to renegotiate both the terms of our short term loan and some of our key supplier trade credit terms from time to time due to the unpredictability of our cash flow. No, not really. We have intangible assets (goodwill) in our balance sheet as well as a number of unproductive assets; mainly old and obsolete plant which if sold, are likely to realise a lot less than their value in our books. No, while our assets exceed our liabilities, our lack of liquidity and high level of interest bearing liabilities has put our business in a precarious situation. No, not at all. We have a lot of uncollectable old debtors and obsolete/unsaleable stock, and if all our assets were realistically valued our business would be technically insolvent. 7. Where you have extended credit do you have the processes and systems in place to manage and collect these debtors? We do not extend credit as a policy and all our sales are strictly cash. Yes, absolutely. Our credit extension, credit review and debt collection processes are robust and are all our debtors are current. Yes, we manage our exposures to individual names and industries, credit limits are tightly managed and all arrears debtors are quickly followed up on. Yes, to a degree. We have outsourced our credit collection process to professional debt collectors. No, not really. In order to retain business and grow turnover we are often forced to 'break' our credit policy rules and make exceptions. No, our credit extension process is slack, credit limits are not tightly managed and we struggle to collect arrears debtors. No, not at all. We have a high percentage of our debtor’s book beyond 90 days and have been forced to write off a high number as bad debt. 8. Are your financial statements audited and unqualified? Yes, absolutely. Our accounts for the last financial year are up to date, audited and are unqualified. Yes, our accounts have been audited, but prior tax assessments remain outstanding. Yes, to a degree. Our accounts have been audited, but they have not been signed off as there are still outstanding issues. No, our management accounts for the last financial year are still being finalised and our accounts remain unaudited. No, not at all. Our accounts have not been audited for the past two years and this had serious ramifications for our ability to raise credit. 9. Are your tax affairs and assessments up to date? Yes, absolutely. Our tax affairs and assessments are all up to date and as such we are in a position to get a tax clearance certificate at any time if required for contracts, finance or tenders. Yes, our tax returns have all been submitted, but our assessment remains outstanding. Yes to a degree. Our VAT returns are up to date, but our tax return has still not been filed for the past year as our accounts have not been finalised. No, we have a long-running dispute and appeal with the tax authority which remains unresolved. No, not at all. Our accounts have not been finalised and as such our tax return has not been submitted. 10. Do you have any contingent liabilities e.g., guarantor commitments, lease obligations, obligations under letters of credit, potential forex losses or potential claims or litigation which could have a material impact on your business? No, not really. We have very limited contingent liabilities and these are restricted to short-term lease obligations on our premises. No, we have a very strict policy not to sign anything that might translate into a liability. Yes, but we are very aware of all our contingent liabilities and manage these proactively. Yes, we are faced with continual claims by customers which we try and deal with as best we can, but a number remain unresolved and subject to legal action. Yes, definitely. We are not aware of the full extent of our contingent obligations as we have not recorded or quantified all the guarantees or guarantor commitments or contracts we have signed over the years. Score Score 0 to 29 Your score indicates that there is a lack of Financial Risks controls and/or discipline that exposes your business/organisation to massive risk. We suggest that you URGENTLY address the issue of risk management generally, and also identify the biggest risks individually and put the necessary policies and programmes together without delay to minimise these risks. Score between 30 and 44 Your score reveals that your Financial Risks controls and or discipline are weak and expose your business/organisation to significant risk. We suggest you address the area of control risk as a priority and look to make improvements in this area as soon as possible. Score between 45 and 54 Your score suggest there are significant potential weaknesses in your Financial Risks controls and that this should receive attention as a matter of priority. While an overall improvement may be required, it is also possible that your vulnerability is limited to one or two areas. Score between 55 and 64 Your score suggests you could and should improve your Financial Risks controls, but that this area probably doesn't represent a massive risk (generally). There may however be some vulnerability in a couple of areas that should be addressed in the reasonably near future. Score between 65 and 79 Your score suggests that you probably have strong Financial Risks controls and are therefore probably not hugely at risk. We would however recommend that you identify possible areas of weakness and address these in due course. Score 80 and above Your score suggests that you have strong Financial Risks controls and have therefore greatly reduced your risk in this area. We would still advise you however to identify possible areas of weakness and address these in due course. reCAPTCHA If you are human, leave this field blank. Submit
