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Gloucestershire Business News

Working Capital: lifeblood of your business - by Mark Robinson, The Bespoke Banking Consultancy

By Mark Robinson, The Bespoke Banking Consultancy Limited 

It is apparent that many businesses are having to use the government support schemes such as the Coronavirus Business Interruption Loan Scheme (CBILS) to access much needed cash during the current lockdown. CBILS has also suffered from teething problems, with many of the high street lenders struggling to cope with demand.

However, how ready will your business be to cope, once the lockdown ends?

It is well documented that companies struggle with cashflow when order books rise quickly and this is a highly likely scenario when the current restrictions are lifted - in many instances, revenues will grow rapidly after a period of virtually zero turnover, and working capital will come under pressure when existing cash balances have been exhausted and bank facilities become stretched.

This outcome is normally associated with over trading (when a business does not have adequate working capital to support orders coming through the door).

Over trading can be serious and fatal to a business just as growth is kicking back in. The old adage is very true - turnover is vanity, profit is sanity but cash is king!

Anecdotally it is common to see businesses running out of cash or exceeding arranged bank facilities (normally an overdraft) with a full order book.

The main high street clearing banks are finding it difficult to cope with demand from existing customers and many enquiries are going unanswered or are subject to extreme delays.

An opportunity with the current lockdown is that it provides time for companies to fully review suitability of current funding arrangements and tweak where required so that your bank facilities will cope and enable you to manage cashflow when we return to business as usual. This is a period of ultra low interest rates so overall funding costs have never been cheaper.

The Bespoke Banking Consultancy Limited are four experienced ex Corporate Bankers who understand these challenges and who offer advice to companies who want to review the adequacy of their current funding arrangements. We have the expertise to be able to access the CBILS loans and assistance from the Banks as we are trusted by all the lenders to provide the right information and show your business in the best possible light.

Early dialogue is critical with lenders at present, as you cannot predict a banks credit policy and appetite in three months time.

So if you are experiencing difficulty speaking to your bank manager please ring us for an initial free of charge conversation.

We can help you with a fundamental working capital review as well as hands on support with discussions with existing and potential funders.

For more information, please visit www.bespokebanking.co.uk, email robbo@bespokebanking.co.uk or call Mark on 07715 530236.

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