Growth Opportunity for Accountants – How to leverage the latest SV Partners Commercial Risk Outlook

Growth Opportunity for Accountants – How to leverage the latest SV Partners Commercial Risk Outlook

Are you looking for opportunities to enhance engagement with your clients, provide a value-add and even deliver new revenue to your firm?

Ladies and gentlemen, I present the SV Partners Commercial Risk Outlook Report August 2018. (I’ve included the download link further on).

In case you’ve missed the press and emails on previous reports, SV partners have been reporting detailed commercial risk analysis over the last 3 years and this is the 6th edition.

For those that like the details here’s the blurb:

The SV Partners Commercial Risk Outlook Report analyses the overall economic conditions of Australian business activity based on the most comprehensive and latest commercial bureau data including trade payment history and data from over 50 variables.

The report predicts the likelihood of adverse financial events including external administrations, petitions to wind up, mercantile enquiries, defaults, bankruptcies, court writs, default judgements.

The report categorises businesses into eight risk bands ranging from minimal to severe risk. High risk business behaviours include late payments on loans and debts, cash flow problems and unfavourable trade payment behaviours. Businesses categorised within the highest risk categories are extremely likely to undergo a serious adverse financial event within the next 12 months of trading.

Data is compiled from millions of commercially sourced records and data assets from sources including ASIC, the Australian Bureau of Statistics, Business Directories, Consumer/Commercial Credit Bureau, the Australian Post Office, Australian Business Register, Telephone Directories and Business Research.
Tell me more!
I think this analysis contains some of the most useful external data a firm can use to help drive engagement with their clients:

  1. It’s just facts – this is real data not a survey.
  2. It covers regions and industries – you can drill into your speciality in your location and pick out the specific clients you want to introduce and discuss the analysis with.
  3. It’s current and accurate – the data is recent and has proven to be accurate over time – we can look back at previous reports to see the indicators leading to recent, high profile business failures in companies that fit the size, location and industry reported.

To start, some observations that can be crafted to create solutions for your clients:

High Risk

Get close to your clients that are either in or have exposure to high risk industries and locations – are they viable or insolvent? What needs to be done to ensure a viable and sustainable business? Are they bankable? Is acquisition or trade sale an option? Rapid assessment is key and quick wins are critical to have any impact on their suitability.

Medium Risk

What can you do for them to support their business improvement and help them mitigate risk. What are their challenges and opportunities? Does their cashflow support investment?

Low Risk

Growth and exit should be the key focuses here. Understanding your client’s next steps and helping them understand how their peers are performing could be a great start. Are they ready to drive growth through acquisition? Can you help them start to craft their exit?

Client engagement and revenue opportunities

Here’s a couple of standout opportunities that you can implement with your clients to drive engagement and revenue:

Counter party risk assessment

Check out their AP and AR are their suppliers or key clients that present a higher risk. What strategies can you put in place to help them mitigate these risks. Is a supplier and client review a good option?

Assess the risk of both suppliers and end clients to your client – are they exposed to counterparty risk? Can you help them develop a risk mitigation approach (e.g. negotiate with another supplier, drive a buying group with a couple of your clients or even facilitate sales and purchase between your clients)

Bank ready

As the royal commission carves its way through the banking sector the real impact will be felt by business owners. Stronger due diligence on borrowing applications, tighter guidelines on lending approvals, increased conservatism on asset valuations coupled with a likely reduction in commercial lending skills at the SME end. There’s a risk that banks will drive business evaluations and revisit supporting asset collateral as well as review the higher risk end of their portfolio based on industry performance.

I think this is where accountants can really shine. Do you have a “bank ready” package you can provide your clients? It might include:

  • Up-to-date financials
  • Cashflow forecast – include a “worst case” scenario
  • Funding requirements assessment and options (debt and equity)
  • Business plan
  • Sales and marketing plan
  • Business Valuation
  • Assets revaluation

You may even include a prescribed amount of time to consult and engage with their bank.

Still with me? To get a copy of the report go here: Get the Report

Getting started is simple – just start with one of your clients:

  • Check the location of your client
  • Check the industry
  • Where does your client potentially sit?
  • For each of the key risk categories what solutions can you provide?
  • What questions do you want to ask your client?

Now you’re ready, make the call: “Hi client, I’ve just been reviewing the latest research on your industry/location and I’d like to check in with you and see how you’re going. Can I come and see you Tuesday morning and discuss – we think it’s important that you are on track to achieve your goals – don’t worry this is all part of our service”

That’s it – over to you and please be brave and share some comments if you find this useful.

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