AGDATA Australian and Robinson Sewell Partners have partnered to share the educational journey in financial literacy with you. Robinson Sewell Partners aim to demystify banking, and place all borrowers on a stronger beach head when cementing your funding requirements.
Information control is the first critical element within the financial cycle to focus on as it drives all downstream commercial activity and decision making. Ian Robinson drills into the importance of having the ability to look internally within the business and report on its financial performance at all levels at any time.
Ian articulates the clearly defined characteristics that are required within the information matrix when dealing with financiers and third parties. Financiers have very specific requirements, and to deliver on their expectations equates to strong engagement and outcomes. On the contrary, the opportunity cost can be profound if information control is not calibrated within the business. The accountability rests upon the owner so be prepared and enjoy the video….
Hi, I’m Ian Robinson and welcome to another edition of Robinson Sewell Partners Business Insights. Today we are going to talk about the first critical element of a business seeking funds from a financier.
Information is the core element that drives all commercial outcomes. It drives operational decisions within management, it drives strategic investment decisions within the business, it drives the benchmarking of a business’ performance and it drives the engagement process with financiers.
Before a business can look externally for funding, it must look internally within the engine room and determine its ability to report on the transparency of its financial performance. To achieve this, information must have the following characteristics:
Accessibility: The business must have the tools and IT platforms that can pull and report data at any time, it is to be user friendly in format and acceptable to the end user.
Accuracy: Data integrity issues will compromise all downstream actions if the information is not accurate. Most importantly from a financier’s perspective, a lack of data integrity will quickly compromise the ability to access capital due to lack of credibility and reliability even if it was not an intentional breach of non-disclosure or misdirection.
Timely: Information that is outdated will not be satisfactory for financiers who have been requested to support the business. Lack of timeliness disguises risk. Timeliness varies in definition but general expectations around the ability to report on a businesses’ financial health should be achievable on a quarterly basis. An annual basis is a minimum standard and monthly reporting may be necessary if the nature of the transaction requires it so.
Relevant: Non relevant information is misleading and distracting. A business must ascertain what the core profit drivers are and have the ability to process data that support these functionalities. Data must also be relevant to the key stakeholders associated with the business. Financiers seek specific data requirements to satisfy their credit criteria, and although it may not be relevant to management per say, create reporting systems that is bespoke to financier requirements will greatly enhance a financiers engagement in the credit process.
"Managing information is not a sexy activity..."
Managing information is not a sexy activity, and rarely is it claimed as a strength within the realm of management. Consequently time and time again it is one of the major shortcomings in many businesses. If you are not proficient, experienced or motivated to complete these tasks, then outsource or internally manage the process with a professional who is. The opportunity cost is profound when measured in dollar terms. Poor investment decisions are made, cost of funds on borrowed money is higher, access to liquidity can be compromised, innovation and application of human resources are misallocated….the list is endless.
The first step to financial liberty is INFORMATION CONTROL
Thank you for listening in. Feel free to make contact with Robinson Sewell Partners to discuss further and I look forward to connecting with you again soon.
Ian Robinson Director - Agribusiness and Corporate Finance