Why should you monitor your financial performance regularly?

The global Covid-19 crisis has affected the global economy like no other crisis since World War Two. And even though signs of a rebound lie ahead, the immediate future is clouded by risk and uncertainty.

The past year has shown that no company is immune to risk, that risk can come from many dimensions, and that it is coming much faster. Financial crises used to take time to develop. Today financial crises come at us with breakneck speed.

Laying the groundwork for a prosperous future implies conducting rigorous financial monitoring today. Here we explain you why it is important to monitor your financial performance regularly.

Risks around payment delays and client insolvencies were already prevalent before the Covid-19 outbreak – affecting respectively 47% and 32% of businesses in Europe’s four largest economies over the previous year according to a financial survey we conducted back in March 2020.

Not surprisingly, company concerns have escalated since the crisis began, with more companies impacted by payment delays and the impact on cash flow causing them to shift priorities – sometimes to ensure survival.

And that could lead to an insolvency domino effect which starts when an insolvent company is unable to meet its obligations to its trading partners, leaving them with unpaid invoices. That means payment delays for their suppliers, and so on down the supply chain.

Survival under these circumstances depends on being able to react swiftly and pivot when necessary. The best way to do this is to be on top of your financial situation so you know what you can afford to do and what you should avoid doing.

That is the best case for paying close attention to your company’s financial performance on a regular basis: cash flow, debt levels and receivables. Monitor especially for signs of vulnerability.

Nicolas Marchenoir, Head of Commercial Underwriting at Euler Hermes France says:

In the short term, you want to be sure you can pay your bills at the end of the month. In the longer term, you want to understand how your capital investments will fare over the next ten years.

Protecting your company has never been so important than now. Especially in this crisis period, you are never safe from the default of payment or the insolvency of one of your customers. Very often bad payments and insolvencies lead to a snowball effect.

A trade credit insurance protects your business against the risks of defaults of payment and insolvencies of your customers. You can look towards a prosperous future:

monitor financial health

We monitor the financial health of your customers

collection

We take care of the collection of your unpaid invoices

And we compensate you when your customers don’t pay

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