Financial crises are nothing new, but they are also not easy.
For many years, there have been global crises affecting companies around the world, including the 2008 mortgage crisis, the United States economic crisis before the Second World War, and the oil crisis in the 1970s.
Recently, the Corona pandemic surprised the global economy, which negatively affected many huge sectors such as tourism and aviation, and raised other sectors such as delivery.
But it is certain that any financial crisis needs to be managed, and it requires a great deal of experience.
Whether or not your facility is facing a current financial crisis, it is necessary to have a comprehensive knowledge of financial crisis management, which will be presented to you in our article.
The concept of financial crisis management
A financial crisis is a situation in which the value of financial assets suddenly falls and causes widespread panic and uncertainty.
The crises are caused by a number of factors, including economic recessions, bank failures, and currency depreciation.
No financial crisis disappears until it has a clear impact: people lose confidence in the financial system, withdraw their money from banks, or stop investments.
This leads to more panic and a decrease in asset value.
On the social scale, crises can have serious negative effects on economies, leading to business failures and high unemployment rates.
It can also lead to social unrest and political instability.
Governments and central banks are taking action to try to stabilize the economy during financial crises.
Such as the provision of liquidity to the banking system or the implementation of fiscal stimulus programs.
And you can imagine the effect of the above on your psyche as a trader or entrepreneur running an enterprise.
The previous condition may be equal to or more severe than the death of a loved one.
But how are small enterprises or startups exposed to financial crises?
When is the project or enterprise exposed to a financial crisis?
It is not possible to set a fixed and precise date when your facility or project may be exposed to a financial crisis.
But it is certain that following up on global news and economic progress may give you a comprehensive understanding of the way things are going.
Since we are in an era dominated by globalization, as a smart entrepreneur, you should always benefit from the experiences of others and have a plan to manage the situation when you are exposed to a financial crisis.
This may include identifying funding sources, budgeting, and communicating with stakeholders.
It is also important to be proactive in identifying potential risks and planning how to respond to them.
You can help reduce the impact of the financial crisis on your project or facility by preparing and developing a plan.
Of course, the work in the previous plan required some accounting knowledge.
But you don’t need to be a veteran accountant to prepare a financial plan for your facility because cloud accounting programs like Qoyod have greatly facilitated this task.
Qoyod helps you manage the risks and automate the activities of your facility or financial project in a very easy way.
How to avoid financial crises
Avoiding financial crises is meant to maintain a strong fiscal position, which means having low levels of government debt and keeping the deficit under control.
It also means having a flexible monetary policy that gives the central bank the ability to respond quickly to changes in economic conditions.
Finally, it means a well-organized financial system that can withstand shocks.
Within your facility, you need a clear picture of your financial situation and an immediate transition to plan (B).
This should be done by meeting your team and communicating with your clients.
How to select staff specializing in financial crisis management
There is no better or worse way to select an ideal staff member specializing in financial crisis management, but experience remains one of the most important criteria.
How can someone confidently say that they can save your business from bankruptcy or inevitable death when they are a new graduate or not an old employee who was once forced by circumstances to face a crisis?
You need to choose people who have gone through a financial crisis before and successfully made their way out of it.
Education is an important factor to consider.
Staff with a degree in finance or economics are more likely to have a better way of managing a financial crisis than those without the scientific background required to deal with such crises.
Staff must also be calm, able to work under pressure, and have rational thinking even when the situation is chaotic.
These are the qualities that, if they exist on your team, will help your facility overcome any financial storms in its path.
The role of Qoyod in helping you cope with financial crises
There are many causes of a financial crisis, such as poor financial planning, poor money management, or an unexpected event that affects revenues.
This means that the financial management of the organization was not well prepared. The solution is very simple: identify the financial crisis internally, respond to it, and resolve it.
This shows the active role of Qoyod, as it helps to control the financial statements that are the basic backbone of the enterprise.
Qoyod provides your enterprise management team with comprehensive financial reports on the facility to assist it in building a plan to mitigate and recover from these risks. Try Qoyod for free for 14 days.
Managing financial crises requires recognizing the crisis and avoiding all emotions in order to maintain psychological balance.
All core expenditures need to be identified and reprioritized.
The crisis must be managed by taking into account all domestic and external factors.
But the key factor here is to adjust the finances, and that’s exactly what Qoyod provides. Try Qoyod for free for 14 days.