Managing Reputational Risk with Efficient Payment Runs

Risk assessment and its management are pivotal components of treasury management and the overall success of any fast-growing SME. As your company continues to grow you are certain to pay diligent attention to liquidity risk, forex risk, and cyber security risk whilst managing its bottom line. 

However, by concentrating on these aspects, you might inadvertently overlook a crucial risk factor vital for the rapid growth of an SME: reputational risk. In this article, we will delve into this concept and how implementing an easy yet effective payment run process can help mitigate this crucial risk for your business.

Reputational Risk:

Reputational risk refers to any factor that has the potential to negatively impact the reputation or standing of a business. It can stem directly from the business’s processes, or indirectly, from the conduct of employees.

This people-oriented risk hinges on client satisfaction. It is, arguably,  the risk factor that is easiest to manage and mitigate, and the one that doesn’t receive proportionate analysis, often being swept along as part and parcel of the company’s wider ethos.

The Vulnerability of SMEs to reputational risk:

SMEs and start-ups are often struck more severely by the fallout of reputational risk than larger organisations.

• Limited Resources: SMEs often have limited resources, which can hinder their ability to invest in robust reputation management strategies and crisis response plans. 
  
  
• Lack of Brand Recognition: Many SMEs are not as well-known as larger corporations, making it easier for negative events or news to disproportionately affect their reputation. 
  
  
• Close Customer Relationships: SMEs often build strong, personal relationships with their customers. While this can be an advantage, it also means that customers may feel a deeper sense of betrayal or disappointment if a reputational crisis occurs.
  
  
• Limited Buffer: SMEs may lack the financial cushion or diversification of revenue streams that larger corporations have. Reputational damage can lead to immediate financial repercussions, such as loss of customers or investors.
  
  
• Supply Chain Dependencies: SMEs often rely on a few key suppliers or partners. If one of these partners faces a disruption, it can indirectly impact the SME's reputation.
  
  

Taking an Analytical approach to reputational risk:

By not using an approach as thorough as the quantitative measures used for other areas of risk assessment, small and medium-sized enterprises put their reputations in unnecessary jeopardy. Why not mitigate these threats by managing all of your international payments through the HedgeFlows platform, bound to deliver satisfaction to you and your customers?

Mitigate risk and maintain a glowing reputation:

Consider these scenarios:

Product Recall or refund

If a refund or unexpected payment involves a substantial currency exchange, a customer may experience losses due to unfavourable exchange rates. This miscommunication may lead to a loss of trust.

Pre-booking currency can be a proactive measure to mitigate this risk. HedgeFlows' multicurrency automation enables cross-border payments to proceed seamlessly. Visit our currency converter to learn more.

Delayed payment to a supplier

Or what if a payment to a critical supplier was delayed? During the initial stages of rapid expansion, your team is likely to be stretched for time and resources. Handling international payments manually leaves your payroll exposed to human error and inconsistencies, which could undermine the trust of your suppliers. Implementing automated payment processes can effectively mitigate this risk, allowing your team to allocate more time to the core mission of your company.

Efficient Payment Runs in Action

Payment runs are often considered a daunting chore, especially when dealing with foreign currencies. At HedgeFlows, we’ve developed streamlined workflows that seamlessly integrate with your systems, making the process of approving, paying, and reconciling easy and safe. With competitive foreign exchange rates and transparent fees, HedgeFlows empowers you to enhance your payment run processes saving you money and time.

Get in touch if you’d like to find out more about our solution.