Realisation

Realisation is the process by which values or assets are converted into cash or other liquid funds. In a business context this often involves the sale of goods, services or other assets. The process marks the transition from a theoretical value recorded in the accounts to actual income that can be used to cover costs, to reinvest in the business, or to distribute to the owners. For small and medium-sized businesses, effective realisation is decisive in maintaining liquidity and securing financial stability.

Why is realisation important?

• Liquidity. Realisation provides the cash a business needs for day-to-day operations, payment of debt, and investment in future growth.
• Profitability. Selling goods and services at prices higher than the purchase or production costs produces a profit for the business.
• Risk management. Effective realisation helps businesses avoid building up excessive inventory or holding assets that may lose value over time, thereby reducing financial risk.

The realisation process

1. Assessment of assets. Understand the value of what is to be realised, whether goods, services or property.
2. Market analysis. Examine the market in order to determine the best time and way to sell, based on demand and price levels.
3. Sales strategy. Develop a plan for how the sale is to be carried out, including marketing and sales channels.
4. Execution. Carry out the sale itself, whether directly to customers, through intermediaries, or via digital platforms.
5. Settlement. Ensure that payment is received and correctly processed in the business's accounts.