Effective financial management necessitates collective efforts and consistent policy application from business leaders.

 

In today's rapidly evolving business landscape, adaptability is paramount. The interplay of various factors, from technological advancements to global economic shifts, continually reshapes the terrain on which businesses operate.

Amidst this dynamism, Victor Cheong, Partner in Audit and Assurance at RSM Malaysia, brings a wealth of expertise and insight to the table. His journey through the realm of finance began in one of Malaysia's Big Four accounting firms. Since joining RSM Malaysia as a Partner in January 2022, his tenure has been marked by a dedication to fostering financial resilience across diverse sectors. His extensive experience spans the spectrum, from shepherding small and medium-sized enterprises to navigating the complexities of public listed companies.

Being one of the judges in the Malaysia International Business Awards and National Business Awards, Victor delves into the strategies and principles underpinning effective financial management in today's globalised economy. His insights shed light on the imperative for proactive financial planning and collective effort within organisations to mitigate these risks effectively.

Furthermore, Victor emphasises the pivotal role of strategic financial planning in charting the course forward for businesses. Rooted in a nuanced understanding of past performance and future aspirations, he advocates for a holistic approach that encompasses both capacity assessment and identification of critical success factors.

Given the dynamic nature of the business landscape, how do you advise companies to effectively manage financial risks, such as currency fluctuations or interest rate volatility, especially in today’s globalised economy?

The world economy post-COVID-19 is challenging given the rise in interest rates and currency fluctuations. I think that businesses involved in import and export require effective financial planning due to the rapid pace of globalisation in developing economies. Effective financial planning requires collective efforts from the right people in the right place. Business leaders play an important role in leading by example with consistent application of policies and coordination of the team to empower the organisation’s goals.

In your opinion, what key factors should businesses consider when developing their strategic financial plans?

I think the key factor in the development of a strategic financial plan boils down to the simple understanding of the baseline of the capacity and costs involved, on top of knowing what the critical success factors are. With a clear understanding of those key factors, only then can you plan for the future. Past results may not guarantee future performance, but they may allow you to know what works and what doesn’t. The quote by George Santayana comes to mind, “Those who cannot remember the past are condemned to repeat it.”

As businesses navigate economic uncertainties, what role do you see financial forecasting and scenario planning playing in helping companies make informed strategic decisions and adapt to changing market conditions?

Financial planning is one of the key components of effective financial management. However, many SME businesses fail to perform scenario planning of “what-if,” which may affect the assumptions being used in financial planning. Scenario planning allows businesses to adapt to changing market conditions, such as lower-than-anticipated demand arising from the broader macroeconomic factors of the economy. Businesses that perform effective financial planning coupled with scenario planning tend to react faster to changing market conditions.

In your role as a judge at the Malaysia International Business Awards and Malaysia National Business Awards, what qualities do you find most impressive when assessing entries?

In my opinion, the key qualities in my assessment would be businesses that can prove their ability and initiative to remain relevant and spur growth, in line with the United Nations Sustainable Development Goals.

 

This article was extracted from The Asian Business Review, published on 17 February 2024

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