Business Performance Optimization: 6 de-risking strategies for business success
Business Performance Optimization: 6 de-risking strategies for business success
Organisations should constantly seek ways to enhance their operations and achieve better results. One powerful approach incorporated by BSO is Business Performance Optimisation.
Business performance optimization is the continuous process of improving a business's efficiency, effectiveness, and profitability. It involves analysing and refining various aspects to streamline operations, reduce costs and achieve better results. Business Performance Optimisation identifies and implements strategies to achieve business goals and objectives and leads to improved performance across the board.
- Improving your invoicing and collections processes
- Negotiating better payment terms with your suppliers
- Offering early payment discounts to your customers
- Investing in technology that can help you automate your accounts receivable process
Antonie van der Hoek, Lead Partner at BSO, emphasises the importance of Business Performance Optimisation.: “Like in sport, performance is about winning—it’s about being your best self. In business, this translates to maximising cash flow, identifying new opportunities, and ultimately driving profitability.” “Here are 6 de-risking strategies that will help you succeed in today’s unpredictable economic climate. Businesses who focus on de-risking strategies do so to mitigate risks and protect their bottom line.”
1. Shorten the cash flow cycle
A healthy cash flow is the lifeblood of business. Reducing the time between payments and recovery improves financial stability. Shorten your cash flow cycle by:
- Improving your invoicing and collections processes
- Negotiating better payment terms with your suppliers
- Offering early payment discounts to your customers
- Investing in technology that can help you automate your accounts receivable process
2. Manage debt efficiently
Debt can be a valuable tool, but it is important to manage it efficiently. This means borrowing only what you need, and making sure you can afford repayments Here are some tips for managing debt efficiently:
- Develop a debt management plan
- Negotiate lower interest rates and better terms with lenders
- Meet all the covenants in the loan agreement - do not default on the terms and make your payments on time
- Avoid taking on too much debt. Debt leverage means that the cost of debt must be less than the expected return on projects to be financed
3. Implement a proper credit management process
Crucial for maintaining healthy cash flow and minimizing financial risk:
- Establish clear credit policies
- Rigorously assessing the creditworthiness of potential customers, and set appropriate credit limits
- Ensure timely invoicing so your customers can plan to comply with your policies
- Perform routine bad debt reviews, monitoring accounts receivable and diligent follow-up on overdue payments
- Establish a robust collections process, which may include automated reminders and, if necessary, escalating to collection agencies4. Diversifying revenue streams
4. Expanding product and service offerings mitigates risk by reducing dependency on a single source of income. Having multiple sources of income ensures that if one source of income dries up, there are other sources to fall back on. For a business with seasonal revenue this strategy provides revenue to bridge shortfalls out of season and complement the revenue profile.
Here are some ways to diversify your revenue streams:
- Develop new products or services
- Expand into new markets
- Offer new pricing models
- Partner with other businesses
5. Leveraging strategic investment
Businesses that invest in high-return projects at a lower borrowing rate, enhance their overall value. Strategic investment can help you to improve your business performance and reduce your risk. This could involve investing in new technology, training your employees, or expanding your operations.
When making strategic investments, it is important to:
- Do your research
- Make sure you have a clear plan
- Monitor your progress
6. Focus on customer relationships
Your customers are the source of cash-flow, the heart of your business. Here are some basics to build and maintain strong customer relationships:
- Provide excellent customer service - differentiate your customer service programme to deliver an excellent client experience
- Get to know your customers, understand their needs – make them feel special
- Ask for and act on feedback to improve your business and service delivery
The Benefits of Outsourcing Financial Services
Many businesses struggle with financial management, compliance, and reporting. Van der Hoek highlights the advantages of outsourcing these functions to a firm like BSO.
“Outsourcing allows business leaders to focus on core operations while benefiting from specialist expertise that goes hand-in-hand with our services.”
From ensuring regulatory compliance to providing real-time financial data, outsourced financial services help businesses make informed and proactive decisions.
“Having up-to-date accounts and regulatory submissions reduces risk and ensures eligibility for tenders and funding opportunities.”
“Our clients can leverage the BSO and BDO network of financial specialists which provides a competitive edge.”
Looking Ahead: The Future of Business Performance Optimisation at BSO
In an ever-changing economic environment, businesses must continuously refine their strategies to stay ahead. “Optimisation isn’t a one-time event—it’s an ongoing process,” van der Hoek concludes. “With the right governance, financial management, and strategic partnerships, businesses can unlock their full potential and achieve sustained growth.”
For businesses looking to enhance their performance and de-risk their operations, partnering with a trusted financial outsourcing provider like BSO is a step in the right direction. After all, as van der Hoek aptly puts it, “Cash is king, and the right financial strategy ensures it stays that way.”
Business Services and Outsourcing. Together for Success.