Trading business is in decline and profits are reducing:
Negative cashflow
Whilst there may good reasons for negative cashflow, it is important to ensure that you understand the cause of this.
Reducing profitability/increasing losses
There may be a number of reasons for reductions in profit, but this could relate to the cost of raw materials or overheads and therefore deterioration needs careful monitoring.
Adverse performance against budget
Whilst not every business may have a formal budget, it is good practise to have some form of forecast, which should then help you foresee and manage potential problems.
Reduction in turnover/order book
If a business turnover is falling this may indicate a decline in demand for its products, and it’s important to understand the reasons and take action accordingly. It’s good practice to be aware of the turnover required, to cover the costs to run your business.
Late or missed payments to suppliers
It is possible that missed or late payments to suppliers may be for reasons other than financial distress, for example, the company is having problems with this supplier. You should be open with our business management team or your Relationship Manager about your supplier difficulties.
New Projects/Acquisitions
A company may have valid reasons for wants to re-brand or develop into a new market so please discuss this with our business management team or your Relationship Manager.
