From the numbers to the change
- Your numbers sayRepayments are slipping and the bank is calling more often
- The cause underneathThe business can no longer carry the debt as originally structured
- What changesA plan, a cash forecast and a specific request
- What to expectTerms the repaired business can meet
An illustration of how the thinking runs, not a client result.
The warning numbers lenders watch
Banks track repayment delay, not just profit. Under the RBI's framework for stressed assets, accounts overdue by progressively longer periods are flagged as special mention accounts (SMA), and an account overdue more than 90 days is classified as a non-performing asset. Cash credit and overdraft accounts are tested differently, on how long the balance stays above the limit or drawing power, so ask your bank how your facility is classified. Know where you stand, and check the current norms and your own sanction terms.
| Days overdue (principal or interest) | Typical bank classification | What it means for you |
|---|---|---|
| 1 to 30 | SMA-0 | An early signal. Time to act. |
| 31 to 60 | SMA-1 | The bank is watching closely. Credit decisions get harder. |
| 61 to 90 | SMA-2 | Serious. Formal resolution discussions likely. |
| Over 90 | NPA | Recovery measures can begin. Options narrow. |
What to bring to the conversation
- A clear, honest explanation of the cause, with numbers.
- A recovery plan with owners, dates and measures, and early evidence it is working.
- A 13-week cash forecast and 12-month projection.
- Debt service capacity with and without the plan.
- A specific request: tenor, instalment, interest, moratorium or fresh working capital, and why it is enough.
- What the promoters are doing: effort, money, personal commitments.
How the approach goes
Know your position.
Every loan, security, covenant, overdue amount and renewal date on one sheet.
Fix the story.
One cause, one plan. Contradictory explanations destroy trust.
Go early.
Before the first miss if you can see it coming.
Ask for what the numbers support,
not for the most you can get.
Keep reporting.
Monthly progress against the plan keeps lenders on side.
Business under pressure? Let a CFO read your numbers.
A senior CFO reads them with you and tells you what is really going on. No cost, no obligation.
Mistakes that cost the most
- Using one lender's relief to pay another without telling both.
- Waiting until the account is already NPA.
- Offering a plan the numbers cannot support.
- Hiding promoter withdrawals or related-party dues.
CFOAvatar complements every turnaround
A human CFO sees your business at the review. Problems do not wait for the meeting. CFOAvatar is connected to your accounting data and checks your numbers every day, so the scoreboard in a turnaround is always current. Ask it what an owner in trouble would ask:
What owners say after the numbers started talking
They even worked with us to finetune our software (Gross Mart) so we could get micro-level details on various aspects of the business. On top of that, they streamlined our receivables follow-up process and provided valuable guidance on bank loans and valuations.
They have facilitated us in putting both process and financial systems in place as well as take some very difficult but required decisions. We are indeed pleased to record our appreciation of their individualized, friendly and timely support in our activities during the course of their association.
Quoted word for word from our clients. Read more client words →
Questions owners ask us
When should I talk to my bank?
As soon as your numbers show repayment is at risk, ideally before any payment is missed. Early conversations have more options.
What is SMA?
Special mention account: a category banks use for accounts showing early signs of stress, based on how long principal or interest has been overdue. It comes before NPA.
Can CFOSurge negotiate with banks on my behalf?
We prepare the analysis, plan and presentation and support you in discussions. The agreement is between you and the lender, and legal advice should be taken where needed.
What is a one-time settlement?
A negotiated payment to close a loan for less than the full amount. It has credit and tax consequences and should be taken with legal and tax advice.