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At Kerry Lehane & Co we know running a business always involves a degree of uncertainty. Market changes, sudden shifts in customer demand, rising costs or unforeseen global events can all impact your bottom line. While you cannot predict the future, you can prepare for it. One of the most effective ways to build resilience is through financial stress testing.

Stress testing is a process that allows you to simulate how your business would perform under different adverse scenarios. Think of it as a financial fire drill. Just as a fire drill reveals weaknesses in safety procedures, stress testing highlights vulnerabilities in your financial structure and provides valuable insight into how well your business could withstand a crisis.

The starting point is to identify the risks most relevant to your business. For some companies, this could be a sharp drop in sales or the loss of a major client. For others, it might be an increase in supply chain costs or interest rate hikes. Once you have outlined these scenarios, you can model the financial impact on your revenue, cash flow and profitability.

By running these simulations, you can answer important questions. How long could your business continue to operate if revenue fell by 20 percent? Could you still meet loan repayments if interest rates increased significantly? Would your current level of cash reserves be enough to cover several months of reduced income? The answers to these questions can guide practical decisions about cost control, credit management and working capital.

Stress testing is not only about identifying weaknesses, it also helps you strengthen your financial strategy. If the results show your cash reserves are insufficient, you might decide to build a larger buffer. If debt repayments look unsustainable under certain conditions, it may be worth renegotiating terms. In many cases, the insights from stress testing can shape investment decisions and highlight opportunities to make your business more adaptable.

Importantly, stress testing should not be a one-off exercise. The business environment changes constantly, and so should your assessment of risk. Regular reviews will keep your business agile and ensure that financial strategies remain aligned with current realities.

In uncertain times, resilience is one of the most valuable assets any business can have. Financial stress testing gives you the tools to prepare for the unexpected, anticipate potential challenges and build a stronger foundation for long-term success.

If you would like to discuss your business needs. Call Kerry Lehane & Co Accountants on 023 8856054 or email info@kerrylehane.com

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