Guiding you to bank with confidence in challenging times

1
Guiding you to bank with confidence in
challenging times
2
Observations on Borrowing from Banks

• Banks need to lend money to Business to be
  successful
• Banks are still lending - Numbers Prove it.
• Criteria still the same

3
What do Bankers look for

• Identify and Assess Risk - The Five Cs
• Character
• You / trustworthiness / integrity
• Financial industry knowledge or ability
• Capital
• Your money / equity
• Dependent on industry / trade cycle
• Capacity
• Ability to repay
• What if scenarios
• Collateral
• Security
• Second way out
• Conditions

4
In Simple Terms

• S - Security
• S - Serviceability
• S - Suitability

5
Borrowing money Can you answer these questions?

• How much do you need?
• What will you do with it?
• When will you pay it back?
• How will you pay it back? (what will make the
  cash flow?)
• What if something goes wrong?

6
Trade Cycle
Cash
Purchase materials
Debtors
Manufacturing
Sales
Inventory
7
What do Bankers look for

• Basic Information Includes
• Regular Interim Financial statements
• Actual Profit Performance Compared to Budget
• Actual Cashflow compared to Budget
• Aged Debtors
• Aged Creditors

8
Cash is King

• Make Cashflow your business number one priority
• Develop a cash flow budget that records the
  amount of money that flows in and out of your
  business, so you can forecast the availability of
  cash for given time frames
• Understand the difference between the role of
  cashflow (covers day to day) and Profits (used to
  pay back debt and support growth)

9
Recievables Strategy

• Revamp and Improve
• Remember its your money
• Ensure they understand terms
• Offer Incentives
• Offer payment options

10
Understand your costs and control them. Ask
yourself

• Do I know the true cost and profitability of
  everything we do? Our services?Our Products? Our
  customers
• What are our margins do we have room to cut
  costs and still remin profitable
• Can we afford to add extra services or will this
  compromise our ability to provide others.

11
Is a Limit a Limit

• 20,000 Overdraft Limit
• Means a 20,000 Overdraft Limit
• It does not mean 21,000 Overdraft Limit
• Does it Matter
• YES

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If you approach a bank now you will need

• The Past - UTD financials Dec 09 latest
• The Present Creditors and Debtors
• The Future Cashflow Forecasts
• Remember the criteria is the same , only the
  detail has changed.
• We expect you to understand your past,present and
  future.