The Bank’s Perspective
If your company is in financial distress one of the key players will be the bank. The bank will usually have more power than an ordinary unsecured creditor because it will probably have a charge or mortgage over the business assets and commonly it will have your personal guarantee. This makes them the most important player outside of the company.
Banks have a common approach to customers in difficulty. As a director, you won’t be familiar with the likely reaction of your Bank. For a start, if a Bank suspects a customer is insolvent, it is common to change the account manager to a manager form the “Credit” area. That manager’s focus is mainly on ensuring the bank recovers its loan in full rather than on “keeping the customer happy”.
At Restructuring Works we have been dealing with the Credit people at all the Banks for many years. So we know what they want and how to help a company in financial distress.
If you are concerned about your Bank we strongly recommend that you contact us before you approach the Bank. CALL US NOW for CONFIDENTIAL FREE ADVICE on how to proceed.
If you want to understand more, read on.
What will your bank spot first?
The bank will be aware of the signs detailed in our Warning Signs page but they will also have a variety of other warning signs that may arise within the bank as a result of their monitoring systems. The main warning signs a bank will see are the following:
- Overdraft constantly at its limits;
- Returned cheques – if you have written cheques when insufficient funds are available this is a clear sign of a company in distress;
- Financial accounts not provided at the required time;
- Constant requests for new facilities;
- Audited accounts delayed;
- An inability to provide forecasts when requested.
What should you do?
If you think the above warning signs exist in your business then it is probably a matter of time before the bank calls you and advises that the investigating accountant is coming. It is always better for a director to control the restructuring process rather than be dictated to by the bank or the bank’s adviser. If you’ve noticed the above warning signs we strongly suggest you contact us using one of the methods detailed on the right of this page. Or if you’d like to do some more self assessment try our pages Is my company insolvent? or Ask IRA! to get some solutions.