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Review your accounts on a monthly basis and know what is going on in your business

“As Warren Buffet wisely said, ‘Risk comes from not knowing what you’re doing.’ 😟

Ever heard the story of the old British bank that crumbled because of one guy’s risky bets in far-off Singapore? Grab a seat; this one’s quite a rollercoaster 🎒

Enter Barings Bank, the British financial heavyweight that’s been around since 1762. These folks financed everything from the Louisiana Purchase to the Napoleonic Wars. That’s like being the financial backbone of some of history’s juiciest moments 🏦

Fast forward to the 90s, and the bank’s star player was a young chap named Nick Leeson. Nick was this hotshot trader they’d sent over to Singapore. The guy was nailing it with his trades, or so it seemed. The bosses back home were thrilled with his magic touch, and little did they know, he had a trick up his sleeve… or more like an entire deck πŸ‘ˆ

Leeson took some wild bets on the Japanese stock market. Picture it: he’s gambling on which way stocks will go using these fancy things called ‘derivatives’. All’s well until Mother Nature steps in with the 1995 Kobe earthquake. Markets went haywire! Just not the direction Nick had hoped for πŸ‘Ž

Instead of dialing up London to say, “Oi, we’ve got a wee problem here”, our man Nick decided to get crafty. He hid his mounting losses in a hush-hush account. No one back home had a whiff of it, thanks to the ocean-sized oversight gap and some pretty lax checks and balances. By the time the top brass realized something was fishy, Barings was in the red for over Β£800 million! Talk about an ‘oops’ moment 😟

The fallout? The mighty Barings Bank, with all its centuries of history, came crashing down like a house of cards. All because of some bad bets and a sneaky account in Singapore πŸƒ

And Nick? Well, after a quick getaway attempt, he got a one-way ticket to a Singaporean jail cell for a few years 😟

You know, as I was delving into this astonishing tale of Barings, I couldn’t help but sit back and reflect. Ever tried piecing together a jigsaw puzzle with a few pieces missing? Infuriating, right? Business isn’t all that different πŸ‘ˆ

Without a complete picture – accurate and updated information – you’re pretty much working with that incomplete puzzle πŸ‘ˆ

Unlike puzzles, businesses don’t come with a box image to guide you. Having your facts straight, reviewing them consistently, and ensuring you’re not led astray by incomplete or skewed data – it’s more than just good practice.

So, next time you’re tempted to skim through that report or shrug off that monthly review, just remember Barings and the crucial importance of always having the full picture πŸ‘ˆ

Disclaimer: Paul Stankiewicz is the owner and principal at Paul Marks & Co Chartered Accountants which is the trading name of Paul Marks Ltd a Limited Company registered in England and Wales (registered number 4487645).This article is designed for the information of readers only and is the opinion of the author only. Readers should not act on any of the information contained in this article without seeking professional advice. Nothing in this article constitutes advice, nor does the transmission, downloading or sending of any information or the Material create any contractual relationship. Links to third party websites are provided as a convenience to the reader, Paul Marks Ltd does not control and is not responsible for any of those websites or their content. Paul Stankiewicz and Paul Marks Ltd accepts no liability or responsibility whatsoever for any loss or damage suffered by any user of the information contained on or accessed through this article or the Material downloaded.