“If you owe your bank £1m, you are at his mercy. If you owe him £1bn, he is at your mercy” – a quote from John Maynard Keynes in 1947, (updated for current values). This factor was clearly seen with the £1.5bn debt write off on the steel company Stemcor agreed recently to save the business. However as a SME business owner you don’t need to be at the mercy of your bank, particularly if you do a professional Bank Tender.
Most business owners we work with are delighted with the idea that they don’t have to go ‘cap in hand’ to their bank but that they can ‘play the market’ and review different funding offers from other viable alternatives. Providing you have a well thought through professional narrative and financial business plan, and you approach the right managers in the right banks, you can secure a good deal.
Very So what are the main reasons for doing a Bank Tender?
1. Your bank manager has changed – you now need to bring a new manager up to speed with your business.
2. You may wish to review the costs of borrowing, both margin costs, facility fees and ongoing charges.
3. You may have a longer term facility with Break points in it – when your bank might choose to increase its margins or impose new conditions on your borrowing
4. You may want to consider an Invoice Discounting facility or Asset Finance facility separate from your main bank to provide new funding.
5. You may require new trade finance in connection with a new export market or new supply contract with a Lower Cost Region.
6. You may be unhappy about poor service being provided by your current bank; perhaps taking weeks to open up a new bank account.
7. You might wish to check your current bank deal on a confidential basis – setting up a shadow facility, ready in case your bank becomes nervous about your company or sector.
8. You may be contemplating a Management Buy Out and want to identify what funding you could achieve.
9. You might be suffering from a soured relationship with your bank, possible over a settlement from a mis-selling event.
10. You might wish to re-negotiate your security, perhaps to remove a Personal Guarantee which you don’t consider is still necessary.
The End Result
Businesses which are financially well run are in a great position to re-negotiate their Bank Facilities and establish the bank relationship they deserve. (If you need some help, we love transforming finance functions).
“Our bank decided to break our financial contract at a five year review. James helped put together a business and financial plan in order approach alternative main & challenger banks at a very busy time for us. We are very grateful for his help and support and both impressed and intrigued with the responses that we had from the banks. At a time when bank lending is not easily available, vfdnet’s services have been invaluable.”
Sarah – Business Owner
We are often asked to prepare professional business plans, using business plan templates and combining this with integrated models which fully link the P & L, cash flow and balance sheet.
Why not talk to us about how our Bank Tender service could help your business?
If you would like to discuss any matter raised in this newsletter then please do contact us.