The Ensuring Business Survival series is provided to offer ’food for thought’ and encourage businesses to be taking action now to ensure survival during the downtown. So far we have looked briefly at questions relating to a Financial & Cashflow review and Costs & Stock review. Now let’s turn our attention to the banks…
SMEs will have to be very diligent in managing their relationship with bankers/lenders during this financial year because of the tightening of controls that many banks/lenders have implemented. There are claims that there is already a significant credit ‘drought’ for SMEs.
Banks/Lenders Review
If it hasn’t been done lately already, now is a good time for businesses to review all aspects of their relationship with bankers/lenders to ensure that the relationship remains on a sound footing.
These strategies include:
• Are you able to supply financial reports, key performance indicators, debtors’ analysis and updated cashflow forecasts throughout the year, as required by your bank/lender?
• Have you reviewed your loans documentation? Are you abiding by the terms and conditions of the loan?
• Is there the opportunity to renegotiate for lower interest rates? Will you be able to take advantage of future lower interest rates?
• Have you reviewed your Loan Agreements to see what undertakings you agreed to with the bank/lender relative to the supply of regular information?
• Do you know if you’re in default on any of the bank’s/lender’s covenants? Are you able to rectify those defaults as soon as possible?
• If you need additional funding and you give credit to customers, have you reviewed your debtors’ management system to try to improve cashflow?
• Have you considered approaching your bank/lender for debtors’ finance (factoring)?
• If you owe money to your bank, do you communicate with your nominated relationship manager on a regular basis so he/she is aware of your business aspirations?
Survival in Difficult Times
FOLLOW THE WHOLE SERIES
This post is part of the “Survival in Difficult Times for SMEs” series.
Be sure to read the other parts of the series for a clearer picture. You can follow the series along on the blog or read them first by subscribing to our popular Business Plus+ newsletter.
Article by Christie Lewis
Christie is Practice Manager at Alan Lewis Accountants . Besides accounting, her passion is for all things small business (and blogging, of course). You can contact Christie directly at christie@lewistaxation.com.au.
Christie has written 811 awesome articles for us at Alan Lewis Accountants – BLOG
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