Having Good Corporate Governance or Lack of it can make or break a business.
I am writing a series of short articles on how business owners can influence and improve business performance by adopting positive Corporate Governance. Adopting good corporate governance in their business can increase reliability and trust among suppliers, banks, investors, and customers.
This series will concentrate on the business environment of Startups and Small Medium Enterprises where most owners-managers are the key persons in managing their companies. In cases where the owners employ staff to take charge of the business’s day-to-day operation, these business owners will still heavily rely on themselves to make strategic business and important financial decisions to sustain the business’s longevity.
The Chartered Governance Institute defines corporate governance as the system of rules, practices, and processes by which a company is directed and controlled. In a nutshell, corporate governance refers to how a company governs itself, includes but not limited to who the decision-makers are internal approval structure, payment control processes, transparency & accountability, proper legal & financial documentation, and appropriate financial decisions.
Good corporate governance contributes to cash flow management in a positive manner. Cash flow is the main blood of a business. A business’s success depends on how companies source, allocate, use, and manage their funds. Good corporate governance minimizes waste of resources, curbs mismanagement, and reduces financial risk and corruption.
In my next article, I will explore how financial statements can reveal a business’s health and how investors/banks can read what is hidden behind the numbers. Stay tuned for my next article.
Writer: Alycia Lee Mie Sin