It's nearly end of financial year, how should I set next financial year to be better?
As the end of the financial year approaches, it's a good time to reflect on the past year's performance and set goals for the upcoming financial year.
As the end of the financial year approaches, it's a good time to reflect on the past year's performance and set goals for the upcoming financial year.
Here are some steps you can take to set yourself up for success in the next financial year:
1. Review your financial performance: Look at your financial statements for the past year, including your income statement, balance sheet, and cash flow statement. Analyse your revenue, expenses, profits, and cash flow to identify areas for improvement.
2. Set realistic goals: Based on your financial performance review, set realistic goals for the upcoming financial year. Be specific about what you want to achieve, such as increasing revenue, reducing expenses, or improving profitability. Make sure your goals are achievable and measurable.
3. Develop a budget: Create a detailed budget for the upcoming financial year that aligns with your goals. Identify areas where you can reduce costs or increase revenue. Make sure to account for any expected changes in the business environment, such as inflation or new regulations.
4. Evaluate your pricing strategy: Review your pricing strategy and consider whether you need to make any changes. Are you pricing your products or services competitively? Are you leaving money on the table by underpricing? Consider adjusting your pricing to better reflect the value you provide.
5. Assess your marketing strategy: Review your marketing strategy and consider whether you need to make any changes. Are you targeting the right audience? Are you using the most effective channels to reach your customers? Consider investing in new marketing channels or strategies to drive growth.
6. Improve your financial management: Consider implementing new financial management practices to improve your financial performance. This could include improving your cash flow management, streamlining your accounting processes, or investing in new financial software or tools.
By taking these steps, you can set yourself up for success in the upcoming financial year.
By reviewing your financial performance, setting realistic goals, developing a budget, evaluating your pricing and marketing strategies, and improving your financial management practices, you can position your business for growth and profitability in the next financial year.
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5 Tips To Optimise The Working Capital Position Of A Company
Working capital is a financial concept that refers to the amount of money a business has available to cover its day-to-day operations.
In simpler terms, it is the money a business needs to pay its bills, buy inventory, and pay its employees.
Working capital is a financial concept that refers to the amount of money a business has available to cover its day-to-day operations.
In simpler terms, it is the money a business needs to pay its bills, buy inventory, and pay its employees.
Working capital is calculated by subtracting a business's current liabilities (the bills and expenses it owes in the short term) from its current assets (the money it has on hand, such as cash and accounts receivable).
Positive working capital means that a business has enough money to cover its short-term obligations and invest in its operations. Negative working capital means that a business may struggle to pay its bills and may need to borrow money to cover its expenses.
Working capital is important because it helps a business maintain its day-to-day operations and invest in growth opportunities. For example, if a business doesn't have enough working capital to buy inventory, it may not be able to meet customer demand and could lose sales.
On the other hand, if a business has too much working capital, it may be missing out on investment opportunities that could help it grow.
Managing working capital effectively is crucial for the success of a business. By monitoring cash flow, controlling expenses, and managing inventory levels, businesses can maintain positive working capital and ensure that they have the resources they need to operate and grow over the long term.
Here are five tips to optimise the working capital position of a company:
1. Streamline Accounts Receivable: The longer it takes for a company to collect money from its customers, the longer the company's money is tied up in unpaid invoices. To optimise working capital, it's important to streamline accounts receivable by setting clear payment terms and following up on overdue invoices.
2. Control Inventory Levels: Holding excessive inventory ties up valuable working capital. By controlling inventory levels and using inventory management techniques such as just-in-time (JIT) inventory, companies can reduce the amount of money tied up in inventory.
3. Manage Accounts Payable: It's important to pay bills on time to maintain good relationships with suppliers, but paying too early can tie up working capital unnecessarily. By managing accounts payable and negotiating favorable payment terms with suppliers, companies can maintain positive working capital and build stronger relationships with suppliers.
4. Improve Cash Flow Forecasting: By improving cash flow forecasting, companies can better anticipate short-term cash needs and optimise working capital accordingly. Accurate forecasting can help companies avoid cash shortages and ensure that they have enough cash on hand to cover day-to-day expenses.
5. Consider Alternative Financing Options: In some cases, companies may need to borrow money to cover short-term cash needs. By considering alternative financing options such as invoice financing, asset-based lending, or supply chain financing, companies can access the working capital they need without tying up valuable assets or taking on unnecessary debt.
By implementing these five tips, companies can optimise their working capital position and improve their financial health over the long term. Growth opportunities such as new product development, marketing, or expansion into new markets. This can lead to falling behind competitors and losing market share.
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How is cash different to profit?
Cash and profit are two important financial concepts that are often used interchangeably, but they are not the same thing.
Understanding the difference between cash and profit is crucial for managing a business's finances effectively. In this article, we will explore how cash is different from profit.
Cash and profit are two important financial concepts that are often used interchangeably, but they are not the same thing.
Understanding the difference between cash and profit is crucial for managing a business's finances effectively. In this article, we will explore how cash is different from profit.
What is cash?
Cash refers to the actual physical currency or money that a business has on hand or in the bank. It includes all the liquid assets that can be used to pay for expenses or invest in new opportunities.
Cash can come from a variety of sources, such as sales revenue, loans, investments, or other income.
What is profit?
Profit, on the other hand, is the difference between the revenue that a business generates and the expenses that it incurs. It represents the financial gain or profit that a business makes over a given period of time.
Profit can be calculated on a monthly, quarterly, or annual basis, and is typically reported on a company's income statement.
How are cash and profit different?
While cash and profit are related, they are not the same thing. The main difference between cash and profit is that cash represents the actual money that a business has on hand, while profit is a measure of financial gain over a period of time.
Here are some of the key differences between cash and profit:
1. Timing: Cash and profit are measured over different time periods. Cash represents the money a business has on hand at a given point in time, while profit is calculated over a period of time, such as a month or a year.
2. Revenue recognition: Cash is only generated when a business receives payment for its goods or services, while revenue is recognized when goods or services are sold, regardless of when payment is received. This means that a business can have revenue without cash, and vice versa.
3. Non-cash expenses: Profit is calculated by subtracting all expenses from revenue, including non-cash expenses such as depreciation. However, these expenses do not impact cash flow directly, so a business can have positive cash flow even if it is not making a profit.
4. Timing of expenses: Expenses can be paid with cash at the time they are incurred or can be paid later. This means that a business can have negative cash flow even if it is profitable, because it is paying expenses that it incurred in a previous period.
Can a business fail because they don't manage their cash?
Yes, a business can certainly fail if they don't manage their cash properly. In fact, poor cash management is one of the most common reasons that businesses fail. Here are some of the ways that not managing cash can lead to failure:
1. Running out of cash: If a business doesn't manage its cash flow properly, it can quickly run out of money to pay its bills and employees. This can lead to missed payments, defaulted loans, and even bankruptcy.
2. Inability to invest in growth: Without a strong cash position, businesses may be unable to invest in growth opportunities such as new product development, marketing, or expansion into new markets. This can lead to falling behind competitors and losing market share.
3. Poor financial performance: Poor cash management can lead to poor financial performance, including falling profits and declining revenue. This can make it difficult for a business to attract investment and grow over the long term.
4. High debt levels: If a business relies too heavily on debt to cover its expenses, it can quickly become burdened with high interest payments and struggle to keep up with repayments. This can lead to a cycle of borrowing and more debt, making it difficult to ever become financially stable.
5. Strained relationships: If a business is unable to pay its bills on time, it can strain relationships with suppliers, creditors, and employees. This can make it difficult to maintain key partnerships and retain talented employees.
In conclusion, managing cash is crucial to the success of any business. By keeping a close eye on cash flow, investing in growth opportunities, and avoiding excessive debt, businesses can maintain a strong financial position and avoid the risks of failure.
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How to build a 13-week cashflow forecast
Cash flow forecasting is an essential tool for any business, helping to predict how much cash will be coming in and going out over a given period of time.
Cash flow forecasting is an essential tool for any business, helping to predict how much cash will be coming in and going out over a given period of time.
A 13-week cash flow forecast is a short-term projection of cash flow that can help businesses anticipate any potential cash flow gaps and plan accordingly. In this article, we'll go through the steps to build a 13-week cash flow forecast
Step 1: Gather your data
The first step in building a cash flow forecast is to gather all the relevant data. This includes historical cash flow statements, accounts payable and receivable reports, payroll reports, and any other financial reports that will help you to project cash flow over the next 13 weeks.
Step 2: Determine your starting cash balance
The next step is to determine your starting cash balance, which is the amount of cash you have on hand at the beginning of the 13-week period. This can be calculated by adding up all your available cash, including cash in the bank, petty cash, and any other sources of cash.
Step 3: Project your cash inflows
The next step is to project your cash inflows, which are the amounts of cash that you expect to receive over the 13-week period. This includes all sources of cash, such as sales revenue, loan proceeds, and other cash inflows.
Step 4: Project your cash outflows
The next step is to project your cash outflows, which are the amounts of cash that you expect to pay out over the 13-week period. This includes all expenses, such as payroll, rent, utilities, inventory, and other operating expenses.
Step 5: Calculate your net cash flow
Once you have projected your cash inflows and outflows, the next step is to calculate your net cash flow, which is the difference between your inflows and outflows. A positive net cash flow means that you will have more cash coming in than going out, while a negative net cash flow means the opposite
Step 6: Adjust your forecast
After calculating your net cash flow, review your forecast and make any necessary adjustments. This may include revising your projections for sales revenue, expenses, or other factors that can impact your cash flow.
Step 7: Monitor your cash flow regularly
Once you have built your cash flow forecast, it's important to monitor it regularly to ensure that you stay on track. Review your actual cash flow against your forecast on a weekly basis and make any necessary adjustments to your projections.
In conclusion, building a 13-week cash flow forecast is a critical tool for any business to manage its cash position.
By gathering all relevant data, projecting cash inflows and outflows, calculating net cash flow, and making regular adjustments, businesses can ensure they have the necessary cash to cover expenses and pursue opportunities.
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Cash is King
In conclusion, cash truly is king in the business world. A healthy cash position is critical to the success of any business, and managing cash flow effectively is essential.
By monitoring cash flow regularly, businesses can ensure a strong cash position and stay ahead of the competition.
The phrase "cash is king" has become a popular adage in the business world, and for good reason. Cash flow is the lifeblood of any business, and having a healthy cash position is critical to success.
In this article, we'll explore the importance of cash in business and why it truly is king.
Here are a few reasons why cash is king:
1. Liquidity: Cash is the most liquid asset. It can be used to pay bills, invest in new opportunities, and meet unexpected expenses. Having a healthy cash balance can provide a cushion in times of economic uncertainty or financial distress.
2. Flexibility: Cash provides flexibility and allows a business to respond quickly to changing market conditions. With cash on hand, a business can take advantage of new opportunities or quickly pivot its strategy in response to changing circumstances.
3. Credit worthiness: A strong cash position can help a business maintain good creditworthiness. Creditors and investors prefer businesses that have a healthy cash balance as it indicates that the business is financially stable and can meet its obligations.
4. Growth: Cash is essential for business growth. It can be used to invest in new equipment, hire new employees, or expand into new markets. A business with a strong cash position has more options for growth and can take advantage of opportunities as they arise.
5. Survival: Ultimately, cash is king because it is necessary for the survival of a business. Without cash, a business cannot pay
Why is cash important?
Cash is important for a number of reasons, including:
1. Operating expenses: Cash is needed to cover the day-to-day expenses of running a business, such as payroll, rent, and utilities.
2. Investments: Cash can be used to invest in new projects, technologies, or equipment to help the business grow and stay competitive.
3. Opportunities: Having a strong cash position allows businesses to take advantage of unexpected opportunities, such as a competitor going out of business or a new market opening up.
4. Emergencies: Cash reserves can help businesses weather unexpected events, such as natural disasters, economic downturns, or supply chain disruptions.
To ensure a healthy cash position, businesses must manage their cash flow effectively.
Here are some tips for managing cash flow:
1. Monitor cash flow regularly: Keep track of all cash inflows and outflows and monitor your cash position regularly.
2. Forecast cash flow: Use forecasting tools to project cash flow for the coming weeks and months, and adjust your plans as needed.
3. Collect receivables promptly: Make sure your customers pay their bills on time, and follow up with overdue accounts.
4. Manage inventory levels: Keep inventory levels in check to avoid tying up cash in excess inventory.
5. Negotiate terms with suppliers: Negotiate favorable payment terms with suppliers to help manage cash flow.
6. Consider financing options: If you need additional cash, consider financing options such as loans or lines of credit.
In conclusion, cash truly is king in the business world. A healthy cash position is critical to the success of any business, and managing cash flow effectively is essential.
By monitoring cash flow regularly, businesses can ensure a strong cash position and stay ahead of the competition.
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The CFO role has many dimensions
The CFO role has never been so important. Companies are navigating uncertain territory and having a strong CFO that can manage the nuts and bolts of finance and help navigate the commercial as well is instrumental to how companies navigate this period.
The CFO role has never been so important. Companies are navigating uncertain territory and having a strong CFO that can manage the nuts and bolts of finance and help navigate the commercial as well is instrumental to how companies navigate this period.
The CFO is expected to know the numbers, manage the numbers and be proactive across the key financial metrics that can impact the ability of the business to do what it needs to do. The CFO needs to have the strength to battle the business when necessary, when the financial performance is below the budget/forecast view.
The CFO is also expected to be the strategist, working with the business to understanding/build and execute on the strategy. The budget and 3-5 year plan needs sufficient investment for the businesss to deliver on the longer term plan.
You can’t forget cash, cash is instrumental to ensure the business can operate, if you have a profit but don’t have operating cashflow, you get yourself into challenges. When COVID landed, many businesses that had not actively managed cash, needed to start, however there are businesses out there that don’t actively manage their cashflow, and this is a mistake.
You need to understand your timing of receipts, timing of payments, working capital requirements (inventory etc.) and understand how this interacts with your budget and forecast.
A 13-week cashflow forecast, is a must and allows you to look at your CF weekly against the budget and then roll another 13 weeks to understand the ins/outs of each cash. Once you understand cash, you can start to actively manage cash. Cash is king and in the current environment even more important than ever.
The CFO leads a finance team, sometimes owns other functions, works closely with the CEO and Executive Leadership team, and is actively involved with the Board, Shareholders and other key stakeholders.
The CFO also takes a leadership role with other projects, business unit to demonstrate the importance of Finance in supporting the other business units. Your shareholders will determine what kind of CFO you become…as in a private equity environment it’s quite different too, private ownership or founder lead company. Whatever the case, the role is varied, hard, challenging and rewarding.
If you are a CFO and looking for some tools, templates and relevant articles, see below Whiteark has some great tools for you to use in your role and with your teams. Jo Hands, Founder/Director of Whiteark has walked in your shoes and has some great experience with related topics and has some practical tools and templates you can use.
Check our CFO guide HERE .
Explore our thought leadership articles about Finance and CFO’s HERE
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My journey to CFO
I started on a typical path post university, 10 years at EY as an auditor……
I loved every minute of it.
Earnst & Young (EY) had a great culture, good clients, great people in the
I started on a typical path post university, 10 years at EY as an auditor…..I loved every minute of it.
Earnst & Young (EY) had a great culture, good clients, great people in the teams, great training, 360 feedback and opportunities to work on projects outside of client work.
I remember EY with fond memories and I remember the day I finished up there were many tears, it was 15th October 2010. EY pushed hard, but they also rewarded hard workers that delivered. I got overseas conferences (Japan, Venice), to lead a global project for a new tool, which allowed me the opportunity to lead, get people onboard and manage a big roll out for the ANZ region.
I loved my team, and my clients, favourite client being Village Roadshow – what’s not to love about Theme Parks and Movies. I learnt so much, but probably didn’t realise it until I left.
My first job out was Telstra, Sensis business unit – Technical, Reporting role. Likely considered a backward step – you are over-qualified in a lot of respects but under qualified in other respects. I was lucky to have a great team, peers and made some great friends along the way. I loved the industry. I loved being part of something and driving and making a difference and seeing that difference come through.
4 years after I started at Sensis, it was sold to Private Equity, which was where my career went from interesting to super-duper interesting. Working with the private equity firm to carve out from Telstra and set up the businesss under private ownership. It was a big change. I took a lead role in working with new shareholder to manage the transition and help build the business in the new world.
This included zero based budgets, cash flow reporting & forecasting and understanding the capabilities required to deliver on the change in strategy. It wasn’t just a big change for Finance but for the whole business, but finance become central to how the business operated and therefore the role I took was pivotal to the success.
Over the next 5 years, I worked as Deputy CFO, then transitioned to CFO and looked after Strategy, Finance, Operations and IT. My role continued to expand.
I really enjoyed the experience and breadth of the role. Navigating strategy, to building a budget and metrics to measure success and the capability in the business to drive the outcomes required.
We found over the period, people self-selected, and private equity wasn’t for everyone. It was about achievement, delivery and ensuring that all key metrics are met. Incentives ensured that the key metrics were measured, tracked and managed.
The private equity approach was hardcore and a lot of lessons were learnt along the way, but for me I realised this was the environment that I enjoyed, I loved the change, execution and an ability to drive an improved outcome in the results.
Since I finished up at Sensis, I have done a number of roles with other private equity firms – doing interim CFO roles, managing transitions, integrations, operating models, strategy, business plans etc, working with different companies to actively manage an acquisition (from DD) to the first 100 days, which will make or break a business and set the tone for the new world.
These projects require different skillset but a driver that can help move things forward and ensuring that there is a plan to deliver on the synergies baked into the plan. I have done this under the banner of Whiteark. I have other clients, but mainly working with PE on assessing, strategy, plan and execution for deals, and that is what I love.
I love the planning but then being able to get in there and really deliver. My finance experience, private equity experience and breadth of roles, has allowed me the opportunity to jump into consulting to private equity with both feet.
Not sure where my journey will land me, maybe back as a CFO one day, but for now enjoying the freedom, challenge and drive of working for myself and picking my clients and making a difference every day.
With my background as CFO – we have a range of tools and FREE templates that we have generated that might help you with your day-to-day life as well. You can explore and download the templates HERE
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Budgeting & Forecasting - it's not as easy as it used to be
The concept of budget and forecast was simple ….
Using prior year information and overlaying assumptions, historical changes, investments etc to deliver a new set up numbers for the upcoming year or years. Shareholders wanted to see an improvement and so as long as the percentage changes were going the right way then you were normally ok.
The concept of budget and forecast was simple ….
Using prior year information and overlaying assumptions, historical changes, investments etc to deliver a new set up numbers for the upcoming year or years. Shareholders wanted to see an improvement and so as long as the percentage changes were going the right way then you were normally ok.
Historical trends in all key metrics was the starting position to build the budget and forecasts and then work out what metrics you can improve, how you can improve and the timing to overlay into the budget/forecast.
Companies can take 3-6 months to prepare a budget, it’s a ridiculous amount of time, and time that should be spent executing the plan and driving a positive outcome rather than validating an excel model.
A budget should be driven from key metrics i.e. customer numbers, average revenue per customers, new customers, customer churn rate etc. Understanding what a customer generates and then costs, can ensure that the model is underlying based on key metrics. This means when you are measuring performance against the budget, you can understand why you are travelling higher or lower.
AND THEN THERE WAS COVID…
Covid landed in 2020 and developing budgets, forecasts and understanding the impact was hard if not impossible. Many businesses tried to do a forecast of where the year was going to land for FY20. The budget was useless and metrics and information that didn’t mattered, now mattered.
Companies were focused on building a forecast. CFO and finance professionals developing a forecast for an uncertain period, where history has little relevance and the future is new and therefor every uncertain. The best way to manage this would be to do scenarios that allow you a high and low scenarios and you know what the impact if each of these different book-ends happen.
Most of the forecast were wrong, as there were guesses but got the company through this uncertain period.
We are now in a getting back to normal period, post COVID (even though COVID still around) and this period is tricky…people were buying products online and now going back into stores, so the revenue from online will drop, back to pre-COVID probably not but what will be the level, how will this impact inventory levels, cashflow requirements and how the business operates.
Budgeting and forecasting has never been so difficult. Having clear business drivers and some scenarios to stress test, cash, debt and other key operating metrics and having a plan B if something occurs that was not originally expected.
It might be years, or never that we get back to the guaranteed budget that used history as the basis, but the more data and information we gather to prepare the financial modelling – budget and forecast the better.
If you are a finance person, you will smile at this article…it’s been your life for the last 3 years and it’s still impacts the way things are done.
Doing a zero-based budget, can help reset the way the business looks at the business, less reliance on prior year and resetting the cost base of the business by asking why do we need that expenditure, what is the return on investment?
There are some easy wins, and it might be what you need to balance your budget for FY24 and beyond.
Whiteark has a range of articles and resources for budgets/forecasts that we will share with you.
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Why I love working with Private Equity?
Over the last 10 years I have worked with Private Equity, in a CFO role, interim CFO role & through Private Equity firms as a consultant.
I love working with private equity, I’ll give you 5 reasons why.
Over the last 10 years I have worked with Private Equity, in a CFO role, interim CFO role & through Private Equity firms as a consultant.
I love working with private equity, I’ll give you 5 reasons why.
1. Fast paced – private equities have made an investment, and they want a return. Speed is the name of the game. Spending money to accelerate a project / return is justified as getting to exit with the required valuation as early as possible is the name of the game. I like this.
Spend money to save time, is a great strategy when you work with Private Equity. With private equity you need to put your runners on, red ones so you can run. Long hours, quick turnarounds & a team environment to drive an outcome in a short period of time.
2. Results oriented – private equity care about results. Whether it’s revenue, EBITDA or cash or all three they want results and they will incentive management to deliver. The incentives offered by private equity firms to deliver a financial outcome are part of the DNA. If you are an ambitious business leader, you can make some money driving very hard for private equity.
I love being results / outcome driven, it’s the way businesses should be. It’s not about the presentation packs, it's about what financial outcomes you delivered.
3. You know where you stand – honest, direct feedback from private equity means you know where you stand. If you are not performing, you won’t work there anymore. So don’t worry about what they think and continue to deliver the results at the speed.
4. Know your numbers – the PE firm expects the CFO to know the numbers, all the key numbers and be able to speak to the why behind the results. This means you need a strong team behind you that will deliver and ensure you can run along at the strategic level and ensure you also know the detail.
5. Cash is king – It wasn’t until I worked in Private Equity that I understood cash. When you report cash daily and do a 13-week cashflow forecast you start to realise that understanding all the timings and levers of cashflow is critical and while the Income statement is critical, knowing cashflow and how to pull the levers becomes critical.
What you learn is that cashflow doesn’t lie. Understanding earnings to cashflow means you can really understand where you are leaking cash.
Not every Private Equity firm is the same, so this article is a generalisation however it gives you a flavour and feel on the 5 key reasons I love Private Equity
At Whiteark we provide a number of services to Private Equity portfolio companies:
👉 Transition work
👉 Integration work
👉 Transaction work
👉 CFO transformation and operating model
👉 Transformation work
Led by Jo Hands who has experienced, capable, hands-on professionals who have done this before and want to help your team and business too.
We have a number of publications that you might find interesting:
Our work at Whiteark is focused on value creation levers, we have case studies for each of these levers that you can see on our website: https://www.whiteark.com.au/
We also have a number of articles that are relevant around private equity.
You might want to explore other thought leadership articles
Finance in Australia 2022
The RBA has increased the cash rate target three times over the four months through August 2022 to limit spending and tame inflation. Rising interest rates are likely to increase the cost of borrowing and subdue business confidence, while simultaneously taming inflation.
Industry Report
Finance in Australia
The RBA has increased the cash rate target three times over the four months through August 2022 to limit spending and tame inflation.
Rising interest rates are likely to increase the cost of borrowing and subdue business confidence, while simultaneously taming inflation.
EXECUTIVE SUMMARY
The Finance subdivision covers firms that provide banking and finance and investment trusts in Australia. The most significant industries in the Finance subdivision are domestic banks, foreign banks, non depository financiers and financial asset investors. The subdivision excludes auxiliary finance and insurance service providers.
The Finance subdivision's operating environment has been challenging over the past five years, due to falling interest rates. Residential property prices have risen over the period, supporting demand for mortgages. However, volatile business confidence has limited growth in capital expenditure from the private sector and overall demand from commercial clients.
Revenue is expected to decline at an annualised 2.4% over the five years through 2022, to $185.1 billion, however is anticipated to rise by 2.1% in 2022, as most operators have wound down deferrals on loan repayments that were offered at the height of the COVID 19 pandemic.
The RBA's efforts to stimulate economic growth have helped drive down funding costs to support profitability for lenders. However, more recent higher capital requirements and remediation costs for the major banks following the Financial Services Royal Commission have weighed on net interest margins and caused subdivision profit margins to fall.
In addition, operators made provisions to cover the cost of the COVID-19 pandemic due to the financial hardship faced by borrowers. The major players have also offloaded or are seeking to sell their less profitable ventures overseas, along with businesses generating lower returns (such as wealth management and life insurance businesses), to refocus on core banking operations.
OUTLOOK 2022 - 2027
The industry’s outlook is forecast to be positive over the next five years, with revenue forecast to grow at an annualised 7.8% over the five years through 2027, to $269.5 billion. The major banks account for a large proportion of the subdivision, and their performance will heavily influence movements in the subdivision's revenue.
The economy's recovery from the COVID-19 pandemic, business confidence, consumer sentiment, property market conditions and global economic growth will also influence the subdivision's performance. Interest rates are projected to rise over the next five years, helping banks capitalise on the loan books built up over the past five years. However, the subdivision faces challenges in higher capital requirements and tighter lending standards.
Source: IBISWorld | Finance in Australia, March 2022
General Insurance Australia
The industry is forecast to improve over the next five years, as local and global economies are projected to record stronger growth. Interest rates are expected to rise too, which will likely boost investment income for insurers. The industry includes general insurers and reinsurers. General insurers underwrite insurance policies to cover individuals and businesses' financial loss associated with property, casualty, liability and other risks. Underwriting involves assuming risks and assigning premiums. ]
Industry Report
General Insurance in Australia
The industry is forecast to improve over the next five years, as local and global economies are projected to record stronger growth. Interest rates are expected to rise too, which will likely boost investment income for insurers.
The industry includes general insurers and reinsurers. General insurers underwrite insurance policies to cover individuals and businesses' financial loss associated with property, casualty, liability and other risks. Underwriting involves assuming risks and assigning premiums. Reinsurers assume all or part of the risk associated with existing insurance policies underwritten by other insurers.
The occurrence of natural disasters has resulted in a rise in the number of claims, forcing industry operators to raise premiums. The COVID-19 pandemic has also led to a shift in types of insurance claims.
DEMAND DETERMINANTS
OVERALL ECONOMIC ACTIVITY | CONSUMER WEALTH | DEMOGRAPHICS | BUSINESS AND CONSUMER CONFIDENCE | RISK PROFILES | PREMIUMS
Demand for products from the General Insurance industry is affected by many factors including: overall economic activity, consumer wealth, demographics, business and consumer confidence, risk profiles and premiums. Wider economic activity affects insurance demand through exposure to risk. Higher employment leads to more risk associated with workers' compensation. A strong economy and labour market increases disposable income, driving household consumption and wealth and therefore, generates greater demand for insurance. Similarly, any decrease in overall economic activity can reduce household coverage, as wealth and consumer expenditure decline. Demographics also influence insurance demand, with individuals' coverage and expenditure increasing as they age. Premiums affect coverage levels and the volume of policies offered. Premium increases can constrain demand and reduce coverage as consumers self-insure when insurance costs outweigh potential payout gains.
OUTLOOK 2021 - 2026
Industry revenue is projected to grow over the next 5 years; driven by the anticipated economic recovery from the recession which is likely to generate demand for general insurance products, providing insurers with the opportunity to grow premium revenue. Additionally, forecasted growth in the cash rate and bond yields will enable operators to generate higher investment returns. Adversely, strong industry competition is forecast to put pressure on profit margins as well as the effects of the 2019 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services which is to come into effect as at 1 July 2021.
The major players are projected to continue to dominate the industry, intensifying price competition and increasing policy coverage. Strong competition is likely to impact Small/Medium Enterprises the most. Large insurers hold more capital, so they can bear higher pricing risks and are better placed to add further coverage to existing policies. Online aggregators have driven a rise in competition, as greater price transparency has generated additional pressure on firms to compete on price.
Larger insurers have a history of aggressive expansion through M&A, and further activity is projected which is expected to reduced industry enterprise and establishment numbers. Employment numbers are also anticipated to drop marginally, as key players continue to acquire smaller operators.
External competition is likely to increase as non-traditional insurers and large technology companies, such as Google, Facebook and Amazon, are anticipated to push into the industry. These companies have been making inroads into online user experience and customisation, and have demonstrated an ability to quickly enter and disrupt new markets. However, the pandemic has forced insurers to accelerate the adoption of digital technology.
The industry will likely face some technological disruption. While technological developments could increase competition within the industry, it also creates opportunities for industry players to to expand, given the growing popularity of cloud computing and business being conducted online.
Cyber insurance is becoming an increasingly popular area of general insurance, which typically covers losses from data theft and other IT-related risks. This market remains largely untapped and presents an opportunity for operators, given the complexity and risks of the cyber landscape.
Source: IBISWorld | General Insurance in Australia, March 2021
LOOKING TO CREATE VALUE IN YOUR ORGANISATION? LET US HELP.
Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes. We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business.
Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au
Are you making money?
Jo Hands asks the question - are you making money? It's a very simple question. Forget accounting standards and rubbish reasons your results look crap are you making sustainable earnings in your business. If your wondering how to know, here are a couple of tips…
It's a very simple question. Are you making money? Forget accounting standards and the rubbish reasons your results look crap… Be frank. Are you making sustainable earnings in your business?
If you’re wondering how to know, here are a couple of tips:
1. Cash doesn't lie - if you are cashflow positive, you are making money.
2. Majority of your costs are variable - therefore are aligned with revenue.
3. Your pricing covers your fixed and variable costs.
Now, regardless if you are making money or not - the next question is could you make more? In most cases the answer is yes. So how do you do this?
Increase revenue
increase price
more effective salesforce
more effective marketing
Reduce costs
look at ROI on all costs
review fixed costs to make variable
review operating model
Drive improved working capital
credit terms reduce to increased cashflow
use pcards to pay suppliers
improve process to reduce time to receive cashflow
There are many levers to increase profitability of your business. That's what we do at Whiteark.
See some example case studies here.
Need support in your organisation? Reach out.
Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes.
We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au
Article by Jo Hands, Co-Founder Whiteark
Forecasting
Mark Easdown writes about forecasting. The prediction process starts with propositions, then verified, quantified and made actionable. A robust peer review occurs and 95% of predictions are modified along the way. Plummer routinely scrutinises predictions with actual events and these results are highlighted at conferences – championing the successes and sharing insights across those that were wrong. “Nobody here is hired because they’re psychic; there hired to generate insights that are useful – even if they turn out wrong. It’s useful to get you thinking”.
Article written by Mark Easdown
Decision Making & Planning, Ways of Working with Uncertainty
“The only function of economic forecasting is to make astrology look respectable.”
“Forecasts usually tell us more of the forecaster than of the future.”
“There is great value in bringing together people who attempt to address a common problem of forecasting from different perspectives and based on very different kinds of data.”
“Your assumptions are your windows on the world. Scrub them off every once in a while, or the light won’t come in.”
“For superforecasters, beliefs are hypotheses to be tested, not treasures to be guarded.”
“I prefer true but imperfect knowledge, even if it leaves much indetermined and unpredictable, to a pretence of exact knowledge that is likely to be false.”
“The Lucretius underestimation, after the Latin poetic philosopher who wrote that the fool believes that the tallest mountain there is, should be equal to the tallest one he has observed.”
A forecast is a statement about the future. (Clements & Henry, 1998)
As authors of “Forecasting” (J.Castle, M.Clements, D.Henry) note; a forecast can take many forms;
Some are vague and some are precise, Some are concerned with near term and some the distant future
“Fore” denotes in advance whilst “Cast” might sound a bit chancy (cast a fishing net, cast a spell) or might sound more solid (bronze statues are also cast)
Chance is central to forecasting & forecasts can and often do differ from outcomes
Forecasts should be accompanied by some level of certainty/uncertainty, time horizon, upper/lower bounds
The domain in which the forecast occurs matter, especially if no-one knows the complete set of possibilities
The authors consider the history of forecasting;
Forecasting likely pre-dates recorded writing with hunter-gatherers seeking where game of predators might be, edible plants and water supplies. Babylonians tracked the night sky presumably for planting and harvesting crops
Sir William Petty perhaps introduced early statistical forecasting in 17th Century and thought he observed a seven year “business cycle”
Weather forecasting evolved with Robert Fitzroy in 1859, who sought to devise a storm warning system to enable safe passage of ships and avoid loss of vessels &/or ships staying in port unnecessarily. Forecasting of nature extended to hurricanes, tropical cyclones, tornadoes, tsunamis and volcanic eruptions.
Yet, history is littered with failures in forecasting, large and small;
Ambiguous forecasts from Oracles of Delphi and Nostradamus
UK storms 1987, with lives lost and approximately 15million trees blown down
Failure to predict 1929 Great Depression or severity of Global Financial Crisis, mid-2007 to early 2009
“When the Paris exhibition closes, the electric light will close with it and no more be heard of it” – Sir Erasmus Wilson & “a rocket will never be able to leave the earth’s atmosphere” – NY Times 1936
What do we want from forecasts ?
Do we want just accuracy? To what degree is that even possible across complicated and complex domains?
Do we want cognitively diverse teams to make us more aware of extreme events? Thus, minimising downside risks?
Do we just want comfort, ideological support and evidence of our existing beliefs? Do we want entertainment?
Do we want to influence a target audience, shift consensus or established beliefs?
These answers may differ if you are a CEO, CFO, Head of Sales, Head of Innovation, an Insurance Actuary, Epidemiologist, Politician, Economist, Intelligence Agency, Shock Jock or Sports Commentator.
For example, it was a mainstream view of epidemiologists across last 20 years that a pandemic was a prominent risk;
“The presence of a large reservoir of SARS-CoV-like viruses in horseshoe bats, together with the culture of eating exotic mammals in southern China, is a time bomb. The possibility of the re-emergence of SARS and other novel viruses from animals or laboratories and therefore the need for preparedness should not be ignored.”- David Epstein 2007
https://davidepstein.com/lets-get-ready-to-rumble-humanity-vs-infectious-disease/
https://cmr.asm.org/content/cmr/20/4/660.full.pdf
So, is COVID19 perhaps SARS2? Clearly, forecasting a pandemic is desirable. How do we give prominence to diverse voices & data and what are the better practices to observe and implement?
SUPER-FORECASTING
In October 2002, the US National Intelligence Estimates (a consensus view of the CIA, NSA, DIA and thirteen other agencies with > 20,000 intelligence analysts) concluded that the key claims of the Bush Administration claims about Weapons of Mass Destruction in Iraq were correct. After invading Iraq in 2003, the US found no evidence of WMDs. “It was one of the worst – arguably the worst - intelligence failure in modern history” notes Philip Tetlock and Dan Gardner in their book “Superforecasting : The Art and Science of Prediction”
In 2006, IARPA was formed to fund cutting-edge research with the aim of potentially enhancing the intelligence community work. IAPRA’s plan was to create a tournament-style incentive for top researchers (intelligence analysts, universities & a team of volunteers for the Good Judgement Project (GJP)), to generate accurate probability estimates to questions that were;
Neither so easy that an attentive reader of the NY Times could get them right , nor
So hard that no one on the planet could get them right
Approximately 500 questions spanned: economic, security, terrorism, energy, environmental, social and political realms
Forecast performance was monitored individually and in teams, and Tetlock’s GJP team proved 60% more accurate in year 1, 78% more accurate in Year 2.
What did these forecasting tournaments learn about the attributes of super-forecasters that may be of relevance in Commercial or Government organisations? Here are a few;
Superforecasters spoke in probabilities of how likely an event would occur (not in absolutes : yes/no), this better enabled them to accept a level of uncertainty – it made them more thoughtful and accurate
Superforecasters were often educated yet ordinary people with an open-mind, an ability to change their minds, humility and an ability to review assumptions & update forecasts frequently, albeit at times by small increments
Actions which were helpful included;
Breaking the question down into smaller components and identifying the known and the unknown, focus on work that is likely to have better payoff, actively seek to distinguish degrees of uncertainty, avoid binding rules. Consider the “outsiders” view, frame the problem not uniquely but as part of a wider phenomena
Examine what is unique about problem and look at your opinions and how they differ from other people’s viewpoints. Take in all the information with your “dragonfly eyes” and construct a unified vision, balancing arguments and counterarguments, balancing prudence and decisiveness – generating a description as clearly, concisely and as granular as possible
Don’t over-react to new information – a Bayesian approach was useful
The GJP found that while many forecasters were accurate within a horizon of 150 days, not even the super-forecasters were confident beyond 400 days, forecasts out to 5 years were about equal with chance.
What about forecasting teams versus forecasting individuals?
o With good group dynamics, flat and non-hierarchical structures and a culture of sharing – teams were better than individuals – aggregation was important. In fact teams of super-forecasters could beat established prediction markets.
o The note of caution around low performing teams came when people were lazy, let others do the work or where susceptible to group-think.
“Unchartered : How to map the future together.”
Daryl Plummer of Gartner, a technology advisory firm who produces forecasts for customers who wish to discern hype from reality.
The prediction process starts with propositions, then verified, quantified and made actionable. A robust peer review occurs and 95% of predictions are modified along the way. Plummer routinely scrutinises predictions with actual events and these results are highlighted at conferences – championing the successes and sharing insights across those that were wrong. “Nobody here is hired because they’re psychic; they’re hired to generate insights that are useful – even if they turn out wrong. It’s useful to get you thinking”.
The author notes “that what matters most isn’t the predictions themselves but how we respond to them, and whether we respond to them at all. The forecast that stupefies isn’t helpful, but the one that provokes fresh thinking can be. The point of predictions should not be to surrender to them but to use them to broaden and map your conceptual, imaginative horizons. Don’t fall for them – challenge them.”
“How to Decide” : Annie Duke – Simple Tools for making better choices
The author presents some useful tips that teams can use to elicit uninfected feedback and leverage the true wisdom of the crowd in decision making. This is especially useful where key forecast & value chain insights and institutional knowledge is held across multiple SMEs and stakeholders;
The Problem;
“When you tell someone what you think before hearing what they think, you can cause their opinion to bend towards yours, often times without them knowing it”, “The only way somebody can know that they’re disagreeing with you is if they know what you think first. Keeping that to yourself when you elicit feedback makes it more likely that what they say is actually what they believe”, “To get high quality feedback it’s important to put the other person as closely as possible into the same state of knowledge that you were in at the time you made the decision”, “Belief contagion is particularly problematic in groups”
Tips to elicit those insightful cross-functional perspectives;
Elicit initial opinions individually and independent before the group meets. Specify the type of feedback or insights required and request an email or written thoughts be provided before meeting. Collate these initial opinions and share with group prior to meeting. Now focus on areas of “diversion”, “dispersion”, avoid using any language around “disagreement”
Anonymise feedback to group – this removes any influence from the insights or opinions of higher status individuals
Anonymising feedback also gives equal weight to insights and opinion and allows outside-the box perspectives to be heard
Anonymised feedback will also allow mis-understandings to be discussed and the team to grow in knowledge together
If the team needs to make a decision within a meeting; try
Writing down insights and passing to one person to write on a whiteboard – maintaining anonymity
Writing down your insights and pass to another person to read aloud to the group
If you must read your own thoughts to group – start with most junior member and work towards most senior
“Radical Uncertainty: Decision Making for an unknowable future”
Authors: John Kay & Meryn King
“The belief that mathematical reasoning is more rigorous and precise than verbal reasoning, which is thought to be susceptible to vagueness and ambiguity, is pervasive in economics”& Jean-Claude Trichet of the 2007-2008 GFC; “As a policy-maker during the crisis, I found the available models of limited help. In fact, I would go further: in the face of the crisis, we felt abandoned by conventional tools”
The authors draw a number of helpful lessons in the use of economic and financial models in business and in government;
Use simple models and identify key factors that influence an assessment. Adding more and more elements to a model is to follow the mistaken belief that a model can describe the complexity of the real world. The better purpose for a model is to find “small world” problems which illuminate part of the large world radical uncertainty
Having identified model parameters that are likely to make a significant difference to your assessment, go and do some research in the real world to obtain evidence on the value of these parameters to customers or stakeholders. Simple models provide flexibility to explore the effects of modifications or scenarios.
A model is useful only if the person using it recognises it does not represent the world as it is really is, rather it is a tool for exploring ways in which decisions might or might not go wrong.
Uncertainty : Howard Marks : https://www.oaktreecapital.com/insights/howard-marks-memos/
In his May 2020 newsletter to Oaktree Clients, Howard Marks notes the field of economics is muddled and imprecise, there are no rules one can count on to consistently show causation, patterns tend to repeat, and while they may be historical, logical and often observed, they remain only tendencies. Excessive trust in forecasts is dangerous.
When considering current forecasts, he notes the world is more uncertain today than at any other time in our lifetimes, the ability to deal intelligently with uncertainty is one of the most important skills, the bigger the topic (world, economy. Markets, currencies, interest rates) the less possible it is to achieve superior knowledge and we should seek to understand the limitations of our foresights.
A forecast is a statement about the future, a future we cannot know everything about , yet it remains a useful tool for decision making, scenario modelling, stress testing and planning. The map is not the territory, so with forecasting we should learn from better practices around collating diverse views and data, building cognitively diverse teams, constantly challenging assumptions, leverage the wisdom & insights of your subject matter experts, maintain intellectual humility & resiliency facing uncertainty, use models wisely and adopt a bayesian approach.
“No amount of sophistication is going to allay the fact that all your knowledge is about the past and all your decisions are about the future.”
LOOKING TO CURATE YOUR BUSINESS STRATEGY? REACH OUT.
Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes.
We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au
Article written by Mark Easdown
Public M&A Activity in Australia
Public M&A activity reduced in FY20, largely due to global uncertainty and economic impacts resulting from the coronavirus pandemic. The transactions accounted for in this document involve Australian ASX listed targets that were conducted (or announced as intended to be conducted) by way of takeover bid or scheme of arrangement in FY20.
Public M&A activity reduced in FY20, largely due to global uncertainty and economic impacts resulting from the coronavirus pandemic. The transactions accounted for in this document involve Australian ASX listed targets that were conducted (or announced as intended to be conducted) by way of takeover bid or scheme of arrangement in FY20.
Source: Australian Public M&A Report 2020, Herbert Smith Freehills
TOTAL DEAL VALUE: $13.4bn
FY19 was $45.9bn / (FY15-FY19 average: $36.1bn)
ANNOUNCED DEALS: 51
FY19 was 63 / (FY15-FY19 average: 57)
SUCCESS RATE: 63%
FY19 was 74% / (FY15-FY19 average: 71%)
MEGA DEALS >$1bn: 2
FY19 was 8 / (FY15-FY19 average: 7)
DEALS INVOLVE A PRIVATE EQUITY BIDDER: 29%
FY19 was 21% / (FY15-FY19 average: 17%)
FOREIGN BIDDERS BY VALUE: 60%
FY19 was 80% / (FY15-FY19 average: 65%)
UNSOLICITED TAKEOVER BIDS: 29%
FY19 was 62% / (FY15-FY19 average: 37%)
MEDIAN TARGET VALUE: $124m
FY19 was $109m / (FY15-FY19 average: $102.1m)
The significant reduction in total deal value ($13.4bn) relative to the number of deals (51) highlights the absence of mega deals (>$1bn), with only 2 mega deals announced - the lowest recorded in 12 years.
Private equity emerged as a keen capital provider, with the ability to look beyond the pandemic in making investment decisions.
There was a steep incline in the number of deals announced in the second half of FY20 -- prior to January 2020, 18% of deals were unsolicited and post January 2020, 43% of deals were unsolicited.
Cash has re-emerged as the preferred form of consideration, with 74% of all deals offering shareholders only cash (66%) or a choice of cash (8%) as consideration. Deals were more likely to succeed if cash was offered as a consideration.
LOCATION OF TARGETS PER STATE
VALUE OF DEALS PER SECTOR
10 LARGEST ANNOUNCED DEALS
Looking for some help with M&A? We’re your people.
Whiteark is highly experienced in providing services to Private Equity firms and has had great success at driving an improvement in returns through involvement in portfolio transition and transformation projects. We understand that execution is the hardest part, and we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Contact us on whiteark@whiteark.com.au
Finance in Australia
Profitability is expected to rise over the long term with less pressure on net interest margins. The primary activities of this industry are: building society operation, financial asset investment service provision, credit union operation, banking service provision, money market dealing, and non-depository financing.
Industry Report
Finance in Australia
Profitability is expected to rise over the long term with less pressure on net interest margins.
The primary activities of this industry are: building society operation, financial asset investment service provision, credit union operation, banking service provision, money market dealing, and non-depository financing.
OVERVIEW
The Finance industry has had a challenging operating environment over the past five years, due to falling interest rates and declining private capital expenditure.
Ongoing macro-economic and geopolitical changes have led to uncertainty surrounding the global economy and financial system over the past five years. Slowdowns in several economies across the globe and concerns about Chinese economic sustainability have affected Australia's economic performance.
Domestically, declining private capital expenditure has led to lower demand for credit, and a downturn in the residential property market in 2018-19 put further pressure on industry revenue. Falling interest rates have been the key reason for revenue declines. Due to the economic impact of COVID-19 revenue is forceast to drop 4.6% in 2020.
The big four banks account for c.60% of total subdivision revenue in the current year. Hence, the finance industry’s performance reflects the performance of national banks, which is linked to the cash rate and market interest rates. To stimulate the economy, the RBA has lowered the cash rate to historic lows. The RBA has made five cuts to the cash rate since June 2019, and further quantitative easing may occur as the effects of COVID-19 persist.
Demand for credit has varied across different parts of the economy. In the retail market, the large value and volume of mortgages has significantly increased industry’s assets. While the commercial market has been reluctant to make significant investments, contributing to weakened demand for credit.
The banks have started offloading divisions with lower returns, and exiting businesses abroad and streamlining operations to focus on core banking operations in Australia. Changes in the regulatory landscape, have prompted this renewed focus for the banks. These events have led to the major banks selling or seeking to exit their wealth management and life insurance divisions due to weaker returns and high regulatory costs for these businesses. The four major banks have also sought to reduce their branch numbers as banking and financial services are increasingly delivered through digital channels. This trend has led to subdivision employment numbers falling over the past five years, despite enterprise numbers increasing.
OUTLOOK 2020 - 2025
Revenue is forecast to grow by 4.3% over the five years through 2025, to $241.1B. Enterprise numbers are forecast to rise due to growth in the number of mutual organisations, neobanks and foreign banks. Foreign banks, along with the emergence of neobanks and other financial technology providers, are expected to contribute to growth in wage costs.
Profitability is anticipated to rise slightly, as lenders recover from COVID-19 related credit impairments, and pressure is reduced on net interest margins. The big four banks' strategic focus is expected to continue shifting due to potential developments across several of their key products and markets, including residential property lending, and divesting wealth management and insurance segments. The banks have streamlined their operations and focused on core banking operations. This shift in focus, and a projected rise in interest rates and lending activity post COVID-19 is expected to support recovery in the lending sector. Capital expenditure by the private sector is also anticipated to rise.
APRA has introduced a range of measures to ensure banks and other financial institutions are more resilient and compliant, with more reforms expected over the next five years. The Basel III reforms were set to come into effect in January 2022, but will be delayed due to COVID-19 as regulators relax requirements to promote credit availability and lending in the economy.
The big four banks currently hold a large portion of the residential mortgage, consumer and business lending markets, emphasizing the financial system's reliance on major banks. APRA amplified the capital requirements on residential mortgage exposure for major banks and those using the internal ratings-based approach in July 2015. Capital adequacy will likely increase further as APRA seeks to bring capital benchmarks to an indisputably strong level, while also making changes to risk weights to discourage banks from issuing higher risk loans.
Post the findings concluded by the Financial Services Royal Commission, consequences are anticipated to continue weighing on revenue growth. Lending activity and credit growth may slow due to changes to the mortgage broking landscape, while financial institutions will likely implement tighter lending standards.
Tighter lending standards are forecast to affect retail consumers through mortgage lending, and loans provided to small and medium businesses.
Source: IBISWorld | Finance in Australia, July 2020
If your business is having issues with cash, it's important to take proactive steps to address the problem before it becomes a crisis.