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5 Finance Risks that Belong on a Growing Company's Radar

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Get a quick overview of some of the key finance risks that can negatively impact fast-growing companies.

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5 Finance Risks that Belong on a Growing Company's Radar

  1. 1. 5 Finance Risks that Belong on a Growing Company’s Radar December 2017
  2. 2. svb.com •Wearing many hats – payables, receivables, payroll, budgeting, expense management •Doing your best to keep up with the day-to-day with a lean, overstretched team •Racing to close books fast and get the latest numbers for investor meetings Running finance at a growing company can mean: 5FinanceRisksthat BelongonaGrowing Company’sRadar 2
  3. 3. svb.com Risk grows along with you. 3 Remember that revenues and the demands on your time aren’t the only things growing… >>
  4. 4. svb.com Understanding and managing financial risks can help you prepare, pivot and minimize potential negative impacts. 5FinanceRisksthat BelongonaGrowing Company’sRadar 4 Keep an eye on these 5 areas as you grow >>
  5. 5. svb.com5FinanceRisksthat BelongonaGrowing Company’sRadar 5 Liquidity Credit Risk Fraud Data Security Breaches Compliance 5FINANCE RISKS:
  6. 6. svb.com5FinanceRisksthat BelongonaGrowing Company’sRadar 6 Liquidity Credit Risk Fraud Data Security Breaches Compliance
  7. 7. svb.com5FinanceRisksthat BelongonaGrowing Company’sRadar 7 Managing liquidity risk means staying on top of your cash position — and being able to project it confidently weeks and months ahead. Why? To better avoid shortfalls that can threaten the business — and to keep your credit rating strong. Liquidity Credit Risk Fraud Data Security Breaches Compliance
  8. 8. svb.com5FinanceRisksthat BelongonaGrowing Company’sRadar 8 Good habits for managing liquidity risk:  Keep books updated with complete data from receivables and payables.  Stay on top of upcoming projects and expenses to build accurate projections.  Stress-test forecasts with what-if scenarios — how well could you handle a spike in costs or losing a big customer?  Keep in close touch with production, sales and customer service.  Line up a source of short-term capital before you need it. Liquidity Credit Risk Fraud Data Security Breaches Compliance
  9. 9. svb.com5FinanceRisksthat BelongonaGrowing Company’sRadar 9 Liquidity Credit Risk Fraud Data Security Breaches Compliance
  10. 10. svb.com5FinanceRisksthat BelongonaGrowing Company’sRadar 10 Managing credit risk means that you take care to extend only as much credit as your customers can afford. Why? You protect your own financial position by heading off cash-flow problems caused by late payments, as well as losses to bad debt. Liquidity Credit Risk Fraud Data Security Breaches Compliance
  11. 11. svb.com5FinanceRisksthat BelongonaGrowing Company’sRadar 11 Good habits for managing credit risk:  Run a credit check before you offer terms in writing, and include late-payments penalties.  Make credit checks part of your sales and business development process so the company doesn’t pursue high-risk accounts.  Track red flags like missed payments, and have a plan for escalating collections.  Make sure other departments alert you if customers “go dark” on communications. Liquidity Credit Risk Fraud Data Security Breaches Compliance
  12. 12. svb.com5FinanceRisksthat BelongonaGrowing Company’sRadar 12 Liquidity Credit Risk Fraud Data Security Breaches Compliance
  13. 13. svb.com5FinanceRisksthat BelongonaGrowing Company’sRadar 13 Managing fraud risk means keeping good oversight of internal processes and tight controls on payment instruments. Why? Fraud can lead to large revenue losses and put the entire business in danger. Liquidity Credit Risk Fraud Data Security Breaches Compliance
  14. 14. svb.com5FinanceRisksthat BelongonaGrowing Company’sRadar 14 Good habits for managing fraud risk:  Segregate duties so different employees handle different steps of a process — one person initiates a payment, another executes it.  Keep master vendor file updates outside of accounts payable.  Guard against payment fraud: e-payments such as credit cards are less vulnerable than checks.  Consider virtual card numbers (VCNs) — they’re easier to track and control. Liquidity Credit Risk Fraud Data Security Breaches Compliance
  15. 15. svb.com5FinanceRisksthat BelongonaGrowing Company’sRadar 15 And finally, don’t expose yourself to fraud risk because everyone values the informal company culture. Respect the value of good finance office processes — even at a fast-moving, fun startup staffed by a close-knit team. Liquidity Credit Risk Fraud Data Security Breaches Compliance
  16. 16. svb.com5FinanceRisksthat BelongonaGrowing Company’sRadar 16 Liquidity Credit Risk Fraud Data Security Breaches Compliance
  17. 17. svb.com5FinanceRisksthat BelongonaGrowing Company’sRadar 17 Managing data security risk means protecting customer payment data and internal financial information and accounts from cyber criminals. Why? Losses from data breaches are on the rise, and criminals are increasingly “following the money” and targeting corporate victims. Liquidity Credit Risk Fraud Data Security Breaches Compliance
  18. 18. svb.com5FinanceRisksthat BelongonaGrowing Company’sRadar 18 Good habits for managing data security:  Take it seriously and invest in the necessary IT tools and services to protect against intrusions and malware.  Learn from resources such as ISACA’s cybersecurity guidance documents to better understand the risks and preventive measures.  If you take credit cards, comply with the Payment Card Industry (PCI) Data Security Standard.  Task your IT person to stay current on threats and share updates with employees. Liquidity Credit Risk Fraud Data Security Breaches Compliance
  19. 19. svb.com5FinanceRisksthat BelongonaGrowing Company’sRadar 19 Liquidity Credit Risk Fraud Data Security Breaches Compliance
  20. 20. svb.com5FinanceRisksthat BelongonaGrowing Company’sRadar 20 Managing compliance risk means knowing what rules and regulations apply to your business, including tax, workplace safety, SEC rules and even international data protection regulations. Why? Avoid a world of trouble and expense by following the rules. Putting good processes in place can help get you ready for an IPO or acquisition. Liquidity Credit Risk Fraud Data Security Breaches Compliance
  21. 21. svb.com5FinanceRisksthat BelongonaGrowing Company’sRadar 21 Good habits for managing compliance:  Seek expert legal advice to review what areas of your business may be subject to regulations.  Understand the requirements of Sarbanes-Oxley if an IPO is part of the long-term plan: – Document your internal fraud controls. – Consider using VCNs for payments to more easily record and organize transactional data. – Create and enforce policies for travel expenses and employee credit card use. Liquidity Credit Risk Fraud Data Security Breaches Compliance
  22. 22. svb.com Liquidity Credit Risk Fraud Data Security Breaches Compliance 5FinanceRisksthat BelongonaGrowing Company’sRadar 22 Do you have a plan to mitigate these financial risks? 5
  23. 23. svb.com 23 Risk is a part of doing business — and you can’t protect yourself from every possible scenario. But gaining awareness, doing your best to mitigate the dangers, and planning for worst-case scenarios can help you minimize your exposure. HowPaperlessPayablesCanStreamlineOpsandImproveCashFlow
  24. 24. svb.com Learn how putting the right payment tools in place can improve visibility and cash flow — so you can better manage risks. Get advice from the experts at svb.com/commercial-cards/
  25. 25. ©2017 SVB Financial Group. All rights reserved. SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device are trademarks of SVB Financial Group, used under license. Silicon Valley Bank is a member of the FDIC and the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary of SVB Financial Group (Nasdaq: SIVB). This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part on information from third-party sources that we believe to be reliable, but which have not been independently verified by us, and for this reason, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice, nor is it to be relied on in making an investment or other decision. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation, offer or recommendation to acquire or dispose of any investment or to engage in any other transaction.

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