Any business with Business finance facilities from a bank will know that 30 June in Australia is the day your performance is judged by your bank. Business needs to ensure that as at this date the balance sheet shows the best possible Working capital position available.
This means chasing debtors hard, and keeping inventory as low as possible. No stock refills or orders to be made until 1 July!
The bank measures cash flow as the movement in debt. The more cash the business can produce by collecting debtors, minimising inventory and pushing out Accounts payable, the better your year will look in the eyes of the bank.
Your risk grade will also be advantaged as liquidity and working capital ratios are included in assessment. Risk grade = loan pricing. Focus on getting your risk grade down and you will see reductions in your interest costs.
For any other bank relationship assistance, please don't hasitate to contact Pearl Financial Services.... Happy new year!
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