Financial risk, types and tips to reduce it
Posted: Mon Dec 23, 2024 6:15 am
What is meant by financial risk ? In the business field, we can define financial risk as the possibility that a company will lose money. This loss can be due to internal or external causes. In the first case, for example, by investing money in the creation of a new product or service; and in the second, by macroeconomic factors.
Part of a company's internal financial risks are related to the granting of credit to customers, since there is always the possibility of a high rate of default or a high average of days in arrears. This can be the result of poor management of credits or accounts receivable .
For this reason, it is crucial to use technological tools in both processes: first, to improve the filtering of approved clients based on their background; and second, to automate the collection processes buy uae database have key indicators at hand that optimize the process. For this last objective, collection management software is an efficient solution.
3-Reduce collection costs
Now that you know a little more about what financial risk is , in this post from Moonflow, collection software , we want to tell you more about what types of financial risks exist and give you some tips to reduce this threat to your corporate finances.
What will you find in this text?
Types of financial risk
1. Market risks
2. Credit risks
3. Liquidity risks
4. Operational risks
5. Legal risks
Types of financial risk
Although there is a wide variety of specific financial risks, we can summarize them in five. These are market risks, credit risks, liquidity risks, operational risks and legal risks.
1. Market risks
This type of risk refers to the threat of financial losses that a company may face due to variations in the market. In this sense, it is a type of external financial risk, but it can also have a high impact, depending on the factor.
Part of a company's internal financial risks are related to the granting of credit to customers, since there is always the possibility of a high rate of default or a high average of days in arrears. This can be the result of poor management of credits or accounts receivable .
For this reason, it is crucial to use technological tools in both processes: first, to improve the filtering of approved clients based on their background; and second, to automate the collection processes buy uae database have key indicators at hand that optimize the process. For this last objective, collection management software is an efficient solution.
3-Reduce collection costs
Now that you know a little more about what financial risk is , in this post from Moonflow, collection software , we want to tell you more about what types of financial risks exist and give you some tips to reduce this threat to your corporate finances.
What will you find in this text?
Types of financial risk
1. Market risks
2. Credit risks
3. Liquidity risks
4. Operational risks
5. Legal risks
Types of financial risk
Although there is a wide variety of specific financial risks, we can summarize them in five. These are market risks, credit risks, liquidity risks, operational risks and legal risks.
1. Market risks
This type of risk refers to the threat of financial losses that a company may face due to variations in the market. In this sense, it is a type of external financial risk, but it can also have a high impact, depending on the factor.