November 30, 2020
“If you don’t accept responsibility for your own actions, then you are forever chained to a position of defence.” Holly Lisle
In our last write up, we spoke about understanding the Risks in general and then came Covid-19 Pandemic which has threatened the existence of many business. Those who have been able to survive, will have to face challenges in many areas such as
- Managing through the economic recovery with emphasis on finding new sources of growth. A laundry Wala in our area has now become a vegetable vendor as well since the original source is not generating income.
- Monitoring the competitive environment and adjusting the strategic direction of the business accordingly. An old Insurance agent has hired a technology expert to guide his clients on online renewals to maintain his business and take new business online.
- Adjusting to the challenging realities of continued globalization. An international client has approached N M Consulting to discuss the possibilities of outsourcing their services which are currently handled in Dubai.
- Maintaining morale and retaining top Few companies have reduced the pay for low performers whereas offered facilities such as insurance, perks etc for top performers. Building customer loyalty. Few service providers offering clients free additional services for time being to ensure they remain with them.
- Protecting sensitive and private There will be challenges in form of cyber-attacks for stealing data since majority people will use online facilities and will not be aware of all safety and security aspects.
- Managing in an environment of increased regulatory oversight. Due to increased online services, there will be transparency in payment and filing of various statutory dues and returns. Businesses will have challenging time to meet these timelines on an ongoing basis. Any non-compliance will be automatically tracked and may result into penal action.
- Understanding and responding to a changing risk profile. A company, planning to outsource its production facility, may not have to continue with the risk of high inventory, Factory Act compliances etc. However, a new risk of confidentiality of data may come up as the company may have to share the designs, specifications with the outsourced agency / company.
- Assessing Capital and managing cash flow Considering the challenges with customers and thereby delayed recoveries may impact working capital management. So, it would be of great importance to have rolling forecast of Cash flow to ensure funds are not blocked in non-performing or dead assets.
- Effectively using the data and information available in the organization to make timely and informed decisions. It is important to study the trend in performance, comparison with the performance of previous period / competitors, profitable or loss-making business deals etc through regular Management Reports so that this helps in decision making.
It is important that businesses understand their own risks and develop adequate internal control measures in order to mitigate the risks. While mitigating the risks, not necessarily the business has to accept all the risks, but it important to understand what can be avoided (For e.g. not dealing on credit), what can be optimised (by taking advance payments or Post-dated cheques etc), what can be transferred (By taking Credit Insurance) and what can be retained as it is (Dealing on open credit with large parties).
As far as challenges at N M Consulting are concerned, while we were able to service our existing clients through offline support in form of various Accounting reconciliations, auditing of pricing decisions (for essential services), Individual Tax issues, etc., we also got a license for Insurance advisory by online exam certification. Simultaneously, we developed a syllabus for bridging the gap between graduates and corporate requirements and the course will be launched shortly. Also, possibility of undertaking entire Management Accounting and Auditing of a tourism company based in Dubai is being worked out.
Let us hope that this environment becomes a new dawn for all businesses and wish you all success in your ventures.
By Nilesh Menezes