Expert Insights: Understanding the Importance of Credit and Risk Management in Business Finance

Finance

Simon Suggett on Credit and Risk Management in Business Finance

Risk and credit are key features of the business finance industry, and understanding them is crucial for any business owner seeking financing options.

And access to finance can be a key factor in determining a business’s success. However, many businesses struggle to obtain the funding they need, often due to challenges related to credit and risk management.

To shed light on this critical topic, we spoke with Simon Suggett, the COO at Fifo Capital.

With years of experience in the credit and risk function of the business finance industry, Simon shared his insights on the importance of credit and risk management, and how businesses can better understand these factors to access more financing options and achieve their growth goals.

In this article, we’ll dive into the key takeaways from our conversation with Simon, and explore how businesses can work to overcome the challenges they face when seeking financing.

Tell us a little about your background and how you got started in the credit and risk.

Over my 35-year career in the business finance sector, I’ve had the opportunity to work with a diverse range of businesses across multiple industries which has helped broaden my knowledge and shape my thinking.

Naturally, over time, as my experience grew, so too did my exposure to a variety of obstacles that ultimately caused me to challenge the orthodoxy and look for alternative ways to achieve desired outcomes securely for clients, culminating in helping them to access the funds they need to grow.

Today, as the COO at Fifo Capital, I’m proud to say, innovation, creativity and flexibility are words best used to describe our everyday thinking as to how we can help businesses in Australia overcome the challenges of accessing funding. Smart and strategic financing solutions enables businesses to unlock their full potential, which is at the heart of what we do.

What are some of the biggest challenges facing businesses when it comes to accessing funding?

One of the biggest challenges facing businesses is the lack of collateral or credit history that traditional lenders require for loan approval. This can be especially challenging for small and medium-sized businesses that are just starting out or have limited financial resources.

That’s where Fifo Capital is different. We understand that these businesses are essential players in the finance ecosystem. That’s why we specialise in assessing businesses based on their cash flow and future potential, rather than just collateral. We believe in supporting and empowering good businesses to achieve their goals and reach their full potential.

In addition to this, many businesses also lack financial literacy and knowledge of the credit process. At Fifo Capital, we understand that education and support beyond financing solutions are essential for our clients’ success.

Calling on a wealth of experience, our team specialise not only in working capital solutions, but also in providing valuable insights and knowledge to assist businesses in making informed financial decisions.

By working with us, businesses can increase their chances of obtaining financing and unlock their business’s full potential.

Simon Suggett quote on how SME businesses can benefit from more robust credit and risk checks

What advice would you give to a business owner who is struggling to access funding?

My advice would be to explore alternative financing options that specialise in assessing businesses based on their cash flow and future potential, rather than just collateral.

At Fifo Capital, we work with businesses to understand their unique financing needs and offer tailored funding solutions that meet those needs.

Can you share some tips or strategies that businesses can use to improve their chances of getting approved for financing?

There are a number of strategies that businesses can use to improve their chances of getting approved for financing. Here are a few key ones.

● Improving cash flow management by reducing expenses and increasing revenue
● Building strong relationships with suppliers and customers
● Keeping accurate and up-to-date financial records
● Providing regular financial reports to lenders and investors

Business forecasting

How do you work with businesses to assess their creditworthiness and determine their financing options?

At Fifo Capital, we work closely with businesses to understand their unique financing needs and assess their creditworthiness based on their cash flow and future potential.

We take into consideration a range of factors, including the business’s industry, credit history, financial statements, business plan and management experience.

Once we have a thorough understanding of the business’s financing needs and credit profile, we can offer tailored funding solutions that meet those needs.

What are some key factors you consider when evaluating a business’s risk profile?

Some key factors we consider when evaluating a business’s risk profile include their cash flow history and projections, industry trends/sector, management experience, collateral and economic pressure points.

We also consider any potential risks or challenges that may impact the business’s ability to repay the loan.

These factors impact financing decisions by helping us determine the level of risk associated with lending to the business and the appropriate terms and conditions for the loan.

Can you share a lesson you’ve learnt?

One lesson I’ve learnt is the importance of taking a holistic approach to assessing a business’s financing needs and creditworthiness. This means looking beyond just the numbers and financial statements, and understanding the full picture of the business, its industry, and its growth potential.

It’s not just about a credit score or a single financial metric, but also about evaluating the management team, market demand, competition, and other factors that impact a business’s ability to succeed and pay back any financing.

By taking this broader approach, we are able to more accurately assess a business’s risk profile and financing needs, and tailor our financing solutions to their unique situation. This also helps us work with businesses to identify potential areas for growth or improvement, which can ultimately lead to stronger financial performance and better access to financing in the future.

Takeaway

It’s important to understand the importance of risk and credit when seeking financing options.

As COO of Fifo Capital, Simon emphasises the need to look beyond just financial statements and numbers to fully understand a business’s growth potential and tailor financing solutions to their unique situation.

Businesses seeking financing should be aware that risk and credit are crucial factors to consider when looking for funding options.

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