KNOWLEDGE HUB: 10 tips on how to protect your business assets
Asset protection planning and asset protection vehicles are one of the ways business owners prevent some of the pitfalls and risks of owning assets. Profit and revenues alone are not enough to protect a business from any potential claims, lawsuits, third party damage or liabilities.
At Trade Finance Global, we put together a Business Assets Protection Plan for your company, in order to get you thinking about some of the key considerations for any assets your business owns.
Asset Protection Plans and Asset Protection Vehicles
The assets your business have purchased and own can be incredibly important to secure a sustainable future and continued growth for the business. As with your personal assets, any business owner should have a good understanding and mitigation strategy in place to prevent any risks associated with your business assets.
Asset protection is so important for businesses to insulate it from any potential claims of creditors. The unfortunate (and somewhat rare) incidence of legal claimant strategies which can cause businesses to lose all of their assets has damaging effects, and very few business owners, particularly those of SMEs do not have asset protection plans or vehicles.
The key take-home to this article is don’t wait, act now. The longer and more watertight such plan is in place, the less likely and less damaging the seizure of assets from future claimants will be.
Protecting assets are all about managing the risks associated. It all starts with a general audit of what the business owns, and what is considered a threat, or vulnerable. Here’s a checklist of key considerations for reducing some of the claimant risks against business assets:
- Review and document all assets the business owns, these include:
- Current assets (e.g. cash, receivables, deposit accounts)
- Fixed assets (e.g. property, tools and furniture)
- Tangible assets (e.g. stock, vehicles, land and office equipment)
- Intangible assets (e.g. intellectual property and patents)
- Undertake stock counts, at least once a year
- Highlight the riskiest assets
- Understand who in the company has access to any risky assets, such as cash or data
- Ensure the risk management strategy for risky assets is up to date and plans are in place to adhere and maintain these policies (e.g. audit logs)
- Diarise any due dates to renew intellectual property, and speak to patent / IP lawyers where relevant to ensure your IP is sufficiently protected
- Ensure all General Data Protection Regulation (GDPR) practices are adhered to, up to date and reviewed regularly (e.g. reviewing any data breach audit logs)
- Review all online and offline security monitoring devices (does CCTV / FOB access logs still work, is the CMS log still being monitored)
- Review any policies around asset protection and management
- Create a contingency plan for any breaches of asset protection through business continuity plans
Will insurance keep a business safe?
We’ve talked about credit insurance wraps on trade finance structures a lot this year, but taking things back to the basics, can insurance really protect a business from these liabilities?
Insurance can be a great way to protect your assets from being damaged or destroyed. Paying a monthly premium on the right plan can help give peace of mind to any high-value assets through insurance claims. However, it’s important to understand the insurance policy, excess and cover type, as well as the type of insurance that is being used. Fix and flip loans are an absolute must when it comes to protecting your assets.
Asset Protection Vehicles
There are several forms of business structure that can be used to protect assets, in particular, separating corporate assets from personal liabilities can limit exposure from a creditor. These include C corporations, S corporations and LLCs.
Protecting your business assets should be at the forefront of any business owner looking to grow a safe, secure and sustainable business. Creating plans to mitigate risks from losing business assets involves almost every area of the business, from treasury and cash management to marketing, and from IT infrastructure teams to operations and stock teams.