Business debt management

It’s important to understand the key drivers of performance to give your business the best chance of long-term success. 

Many of the problems affecting business performance fall into at least one of the following categories:

1. Cash
   The way a business manages cash in the short term is an essential part of ensuring long-term success. It’s important to operate tight cash management – stopping the unnecessary outflow of cash from the business and taking advantage of any available surplus. Where there are difficulties in matching the inflow and outflow of cash, identifying what can be retained in the business to give a convenient ‘breathing space’ should be considered. This will give time to assess the options available and, if required, to secure a long-term finance solution.
   
   
2. Profitability
   It's important to understand the profitability of your business so you can identify what's working well and what's not, and make informed decisions. Short-term cash problems will often be caused by underlying profitability issues in the medium to longer term. A particular part of the business may be under-performing, and in order to identify problem areas and make informed decisions, it’s important to understand profitability by business unit.
   
   
3. Management
   It’s generally accepted that management strength is key to running a successful business. There are various ways of assessing people or management, including motivation, leadership, commitment and communication.

Keeping an eye out for early warning signs could help you spot any problems early on. These include:

• Falling turnover
• Deteriorating margins
• Missing targets
• Overspend against budgets
• Increased use of overdrafts
• Regular account excesses
• Increased stock holding
• More outstanding debtor payments
  

You can’t predict everything, so it’s a good idea to be aware of the situations that could catch you out. These include:

• Loss of key staff 
• Emergencies such as flooding or fire
• Reputational damage
  

If you’re worried that your business is showing warning signs or has taken an unexpected blow, or even if you are already having financial difficulties, it’s important to let us know – the sooner, the better.

You can do this either through your Relationship Manager or by visiting our contact pages.

So we can give you the right kind of help or advice, it would be useful to have the following information handy when you talk to us:

• Your current cashflow or budget, and likely future projections
• Any changes in your or your business’ circumstances
• Anything else you would like us to consider or think we need to know