4 Ways to Manage Financial Risks

Posted by Cedric Joshua Martinez
May 20, 2020

Have you ever made miscalculations on your expected ROI? Or perhaps you have exceeded your budget on your business expansion costs? As an entrepreneur, you have to be wary of these as it could harm your business financially.6F0EE2DE-80DD-4C28-8DAE-47145C3C889B

Financial risks that stem from overspending can be an obstacle that will keep your company from meeting its financial obligations. As it is, every business is subject to a certain level of financial risk. It’s your responsibility to mitigate financial risks to maintain a healthy cashflow. Here are some tips on how you can do that.

Invest wisely.

One of the strongest and most palpable financial risks that a business owner could encounter are risks that are associated with investments. Luckily, there are many ways to learn the ropes to investing before giving it a final go.

Make sure that you have enough information before you make the decision to invest in anything. In this regard, consulting with your accountant can be a great help, as they can give you sound advice on how you can maximize your returns.

Related: 5 Challenges Faced by Small Businesses and How to Solve Them

Learn about diversification.

Discovering the techniques of diversification will come as you further your knowledge about investments. Diversification is indispensable in mitigating financial risks as its primary purpose is to minimize risks by spreading your investments among different financial instruments.

Diversification puts the ball in your court because it allows your investments to have varied progressions depending on where you actually put your investments into. This is where an expert advice from an accountant who has wide experience in your industry can be beneficial.

Put money in your savings account.

Consider saving some of your ROI on your savings account. While your savings account will not yield significant interests in the long run, it is still one of the safest ways to stash your money. Moreover, your savings account can also help you transfer cash electronically, paving way for a quicker and a more convenient financial transaction process.

You can work with your accountant to identify the areas of your business operations where you can cut costs and make significant savings. 

Get a trusted management accountant.

There’s nobody who can help you with managing your cashflow and making savvy business financial decisions better than your accountant. Talk to your trusted and reliable accountant to help you in different facets of your business finances, be it in paying off your debts or rounding up investment returns.

Read Next: Solve These Common SME Problems When You Outsource Your Bookkeeping

Financial risks are inevitable but if you know how to work your way around these risks, your business will consistently remain on solid ground. For more advice on countering financial risks, get in touch with our qualified advisers at D&V Philippines.

Read our free whitepaper on how you can increase your operational efficiency and reduce risk by getting your business to the cloud. Click the link below to learn how you can get started with cloud-based accounting.


 First published on 28 August 2015; Updated on 20 May 2020


Our Outsourcing: How to Make it Work guide explores how you can utilize accounting and finance outsourcing to drive growth to your business and add value to your processes.