Welcome to 2023, and its shaping to be an interesting year in terms economic growth, inflation, and the prices of goods and services. Particularly after we have seen month on month increases by the Reserve Bank in the target cash rate.
With uncertainty surrounding the Australian economy for people and businesses it’s worthwhile revisiting the importance of your business’ preparedness when looking to borrow.
So here’s some questions for you to make sure you can answer, before you approach ‘the bank’ for money:-
Understand what the current critical funding need is for the business e.g. cash for stock, plant, equipment etc?
Why and how has the need come about?
What do my aged payables and receivables look like at present, compared to say 12 months prior?
What are my supply lines like and have I got a heavy dependence on just a few suppliers?
Have I reviewed the clients I sell to? Are they still the right target market?
Has my business been adversely effected by seasonality of trade, or perhaps impacted by an external influence out of my control?
If I have ‘stock’ is it still the right mix? What’s been sitting on the shelf for some time?
What is my ‘cash in bank’ position like today, compared to 12 months ago, and also compared to sales volumes?
When did I last look at my ‘product/goods pricing strategy’?
Is my mix of staff still appropriate?
From a succession planning point of view, is my business relatively safe?
The above list is by no means complete. I’ve simply used some simple trigger questions as what can be seen as a ‘health check’, to stimulate your thinking where the business could be potentially facing some challenges in 2023. Knowing these current and imminent challenges will certainly give your bankers confidence that you understand your business and it’s current needs.
COMPASS can always assist businesses in terms of not only seeking the right commercial loan, but also in positioning a business to maximise it’s chances of obtaining that finance.
Contact Michael on 65832211 if you would like to book an appointment.