The importance of financial hygiene for SMEs to align activities and secure the best possible financing

In this video, Aslan Münür, CEO of Prestaflex, discusses the delicate subject of financial hygiene for Swiss SMEs with Thierry Dime, editor-in-chief of "Le Monde Economique".

https://youtu.be/ormrxSWHuv0

Rule number 1: proper bookkeeping and a realistic, up-to-date financial vision

According to Thierry Dime, a company's financial health begins with well-detailed, up-to-date accounts. This ensures rapid access to accounts such as balance sheets and operating statements. However, he points out that he does not take the place of the trustee and that his role is to coach, among other things, to ensure that the accounts are up to date and that there are no missing parameters or financial adjustments that have not been established. Where the trustee keeps the accounts and reconciles transactions, the financial expert comes in to boost flows and adjustments. Where the bank provides financing for companies deemed honourable and reliable, the financial expert provides solutions in complex cases, offering alternatives to improve cash flow and fine-tune the financing application. This often unblocks situations that the bank doesn't address.

Rule number 2: the fundamental importance of separating private and business accounts

Mr. Aslan also stresses the importance of maintaining sound financial discipline in SMEs, in particular by separating private and business accounts, and avoiding any distortion between these two spheres. It's not uncommon to find a lack of discipline in family businesses, which can lead to an accumulation of risks. Mr. Dime points out that, in Switzerland, 88% of companies are family-owned, which represents an accumulation of risk on the side of this separation. In this configuration, it's important to enlist the help of financial professionals to ensure a neutral view.

Rule number 3: avoid too much diversification and maintain a coherent vision of the company's goals

As far as diversification is concerned, Aslan recommends limiting it to avoid taking on too much risk or spreading yourself too thinly. It's essential to stay focused on the company's core business, and not be distracted by unprofitable secondary activities that deviate from the main vision.

The role of banks in providing financial advice is very limited in Switzerland, especially in the current economic climate

On the other hand, Mr. Dime refers to the current context in which banks are reluctant to lend money to SMEs. The CEO of PrestaFlex points out that banks are not always proactive in their dealings with customers. Indeed, it is often up to the customer to approach the bank to discuss his or her concerns. There are many reasons for this passivity. When you receive a refusal, it may be due to a question of allocation of financial resources by the banks and a need to have guarantees on their side. This is where a financial coach can step in to propose innovative financial solutions.
Unlike banks, financial coaches visit SMEs on site, assess their customer's financial situation, identify areas for improvement and offer personalized advice to help them achieve their growth objectives.

Excellence skills are key to building trust with banks and investors

Investors and banks can scrutinize the manager's lifestyle to assess the company's reliability. A consistent, irreproachable attitude is crucial to obtaining better financing. They will also look for information about the manager on the web and social networks to ascertain his profile and lifestyle, which could influence his management style. In this context, avoiding being too eccentric can build confidence and make it easier to obtain financing.

In addition to scrutinizing the executive's lifestyle, banks carry out in-depth checks on their personal data. For example, they may use the CRIF check, a solvency verification service. Being humble and setting an example with a consistent attitude can help managers inspire confidence and reassure investors.

To remember in this article

Mr. Aslan gives three important tips for maintaining good financial hygiene for Swiss SMEs: separation of private and professional life, good record-keeping and breakdown of transactions, and avoidance of over-diversification. One piece of advice that is geared towards excellent skills is to remain humble, as banks and other investors may scrutinize the lifestyle of the manager. The key is to ensure that you inspire confidence by demonstrating a consistent attitude to obtaining better financing. Coaches and financial experts can help SMEs implement these practices and maintain good financial hygiene.

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