From the numbers to the change
- Your numbers sayLimit at the ceiling most days, delayed stock statements, queries about cheques and credits
- The cause underneathCash trapped, money moving between accounts, thin headroom, uneven reporting
- What changesGet your own story straight first, bring a plan and a forecast, then meet the bank
- What to expectTrust kept, terms preserved, options open
An illustration of how the thinking runs, not a client result.
The numbers to open first
These are the numbers lenders usually look at. Compute them yourself before the meeting.
| Number | How to get it | What worries us |
|---|---|---|
| Limit utilisation | Average drawn / sanctioned limit | Close to the ceiling with little or no fall during the month |
| Drawing power vs limit | (Stock + eligible debtors) less the bank's margin, against the limit | Drawing power below the sanctioned limit |
| Interest cover and debt service coverage (DSCR) | Operating profit / interest; cash available / debt service | Falling, or below your sanction's covenant |
| Days overdue on any facility | Days beyond due date | Any slippage, even for a few days |
Likely causes, and how the numbers test each
| Possible cause | What you would see in the numbers |
|---|---|
| Cash trapped in debtors or stock | Limit full while profit is positive; working-capital days up |
| Statements not matching the accounts | Stock or debtor statements differ from books; late submission |
| Funds leaving the business | Drawings, related-party loans or fixed asset spend from the limit |
| Real losses | Operating losses funded by the cash credit |
What to change, in order of effect
Reconcile first.
Make stock, debtors and book numbers agree before the bank compares them.
Build the cash story:
why the limit is full, how long, and how it comes down. Use a 13-week forecast.
Prepare the pack:
latest accounts, ageing, forecast, the cause and the plan.
Meet the bank early and volunteer the bad news,
with a specific plan and request.
Fix the conduct:
regular statements, no unexplained credits, and hold to the plan.
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.
What to expect, and when
A prepared conversation can change how a lender treats the account within a review cycle. If the business is genuinely in difficulty, early disclosure with a plan is the best position you can negotiate from.
Mistakes that make it worse
- Hiding the cause and hoping the questions stop.
- Shifting funds between accounts to look better.
- Asking for a bigger limit without explaining why the current one is full.
- Waiting until the first overdue.
Go deeper
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.
You have planned to set goals along with me and have been proactive in ensuring that we reach milestones as planned. In the event you depended on me for my inputs or consent, you have been prompt and caring in ensuring that we do not waste time.
Quoted word for word from our clients. Read more client words →
Questions owners ask us
Why is my bank asking about my account?
Banks monitor conduct: limit use, delays, cheque returns and statements. A pattern they find unusual triggers questions.
Should I increase my bank limit?
Only if the numbers show a real need for working capital and a path to repay. A bigger limit funding losses worsens the problem.
What if I am already overdue?
Speak to the bank now with a plan. See our debt restructuring and lender negotiation page.