Reducing risk of insolvency

Description

Reducing risk of insolvency involves implementing proactive financial management practices to ensure an organization’s ongoing ability to meet its obligations. Key actions include maintaining adequate cash flow, diversifying revenue streams, monitoring liabilities, and establishing contingency reserves. This strategy addresses vulnerabilities such as overreliance on single income sources, excessive debt, and unforeseen expenses, thereby safeguarding operational continuity and stakeholder interests by minimizing the likelihood and impact of financial distress or bankruptcy.