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Top Ten Warning Signs for Banks
- Your overdraft is always at the limit.
- Your bank always wants more information.
- Your bank has returned cheques.
- Your bank has refused to increase your overdraft or provide a loan.
- Your bank has asked for your facilities to be reduced.
- Your bank wants to introduce investigating accountants.
- Your bank asks for increased security.
- Your bank wants personal guarantees.
- Your bank wants to increase personal guarantees.
- Your bank wants security against your own property.
Clearly the relationship with the bank is of primary importance. If this relationship is under pressure then the causes and effects must be examined by the directors and the turnaround advisors. The bank, in our experience, will only resort to aggressive action if the debtor is delinquent, fails to respond to reasonable requests or does not provide sensible financial information.
We make sure that the bank is kept informed of our work at all appropriate times. Once we are appointed we insist that the client company always provides management accounts, notification of any changes and generally updates the bank as to any news.
Over the years we have worked with most major banks and have only seldom had a bank reject our proposals. Clearly our common sense approach to inclusivity pays off. Often the news for the bank is not good but at least we keep them in the loop.
Most directors fear the bank when things have gone wrong. They usually ask what will the bank’s reaction be to our involvement? Our approach is to ensure that all stakeholders in the business buy into the deal – this must include the bank.
Almost all banks do NOT want to close distressed businesses, however they will take action if the directors seem incapable of doing so, will not take professional advice or if the bank has lost faith in the directors.
So KSA makes sure that the bank is involved as soon as practical. Our involvement generates confidence and support from the lenders who view our appointment as a positive step.