Rates of Currency Exchange – Impact on Australian Businesses – Jones Partners


According to a recent report issued by the ASIC the main reason for Corporate insolvencies can be related to ”bad strategic management” It may seem that exchange rate fluctuations are beyond the control of business managers and it is obvious that currency variations have a major contributor on Australian businesses.

If a business relies heavily on sales to overseas customers, a high Australian dollar will cause serious problems.  On the other hand if the business purchasers goods and service from overseas a strong dollar will be a major advantage.  In some cases a minor variation in exchange rate can be the difference between success and failure.

Whilst the exchange rate itself is beyond the control of individual managers, the management of this fluctuation is not.  A good business operator will be watching exchange carefully and looking for opportunities to capitalise on this variation.

If a business is heavily affected by currency fluctuations, management needs to consider its policies carefully surrounding such things as negotiating contracts in Australian dollars to avoid the obvious risk.  On the other hand, with expert knowledge of currency rates, businesses owners can in some circumstances, take advantage of currency fluctuations if the business can choose the timing of its payments, or fixing exchange rate terms in contract negotiations to avoid any major cash flow difficulties and the subsequent need for recovery action.

A major project into the study of Insolvency Trends in Australia is being sponsored by Jones Partners and was introduced by Phil Ruthven, Chairman of IBISWorld at a function held in July 2013. (please see extracts of the attached video). The Jones Partners Economics Report entitled “Collapse, Restructure & Renewal – State of Australia’s Insolvency market” will be issued in early 2014 and will deal with the impact of currency fluctuations of Australian businesses.  This report will be the first study of its kind on the Insolvency Trends in Australia.

The Small Things

Keeping on top of the small things though so often acknowledged are often overlooked. My five flavored recipe for staying afloat is a great little mind tool to adopt and thrive.

Laugh

Laugh at yourself. Close your eyes and imagine the sun going down and coming up regardless of your own actions. As soon as your humility gets out of check you are not in the right place to be on top of the small things that will help yourself and those around you succeed.

 

Stakeholders

Identify the key stakeholders relevant to your position. Depending on your plot in the universe your individual key stakeholders may vary from customers, potential leads, taxpayers, the media, executives / managers within your own organization to all of the above. Once your mind is settled on the key people to your position or businesses success you can keep that in the back of your mind when allocating priority to tasks.

 

Identification

Take a moment to identify the small and often overlooked tasks that both help your position, your team and ultimately your organization thrive.  Awareness of the small things like writing a happy birthday text to a business relationship is the first step to ensuring they are all done. Not for everyone but I like to write down little matters to ensure I have a record of everything that I have identified for attention.

 

Allocate

Allocate an appropriate period in the day for every day to attend to all the little things.Depending on your efficiency, business and position it might only be 5 minutes but pick a time that suits you best that you know you can stick to.

 

Discipline

Not my favourite word but necessary and the most important part of the recipe (consider it the vegetables if you will). You need to be disciplined and get your little tasks done.  As Margaret Thatcher once said “No one would remember the good samaritan if he’d only had good intentions; he had money as well.”

 

I hope you both enjoy and employ the above and of course, if you are facing financial troubles do not hesitate to give me a ring.