“Survive until 25” is a phrase being used more and more as we navigate the tough trading conditions of 2024. But what does it mean and what concrete steps can you take to give you and your business the best chance of surviving – and thriving – in tough economic conditions.
The answer is liquidity – or having sufficient cash resource available to pay your bills when due – and to take advantage of the inevitable bargains that will pop up toward the end of this economic cycle.
In this article we will discuss the steps you can take to safeguard your business and prepare for new opportunity.
First and foremost, make sure your financial reporting is up to date. Most lenders will expect to see:
- March 24 accounts. Either finalised or in draft form or at the very least, a profit and loss report out of Xero or Myob for the 24 financial year.
- Management account for the 3 months to June 24
- A list of aged debtors and creditors
- Details of any tax arrangement
- Its also not a bad idea to have a cashflow forecast that supports your ambitions.
The next step is to think about how you plan to secure your proposal – if that’s a possibility. Because the simple fact is that secured lending is less expensive than unsecured lending.
Here is a brief list of things to consider:
- Mortgage security. Preferred by most banks who favour no more than 80% lends against residential property or 65% against commercial.
- Equity release from unencumbered assets. This could be as simple as offering your late model ranger as security or a whole fleet of trucks. Finance companies are generally happy lending around 70% of value. Sometimes more, sometimes less.
- General security agreement (GSA). This is a floating charge over your business that gives the bank access to your company’s unencumbered assets.
- Restructure existing debt.
- Unsecured.
Or a mix of the above.
The ultimate goal is to ensure you have access to sufficient capital so that you can sleep at night and also plan your next project.
CrediFlex partners are experts in commercial finance and understand how banks and Asset finance companies work. We take a long-term approach and genuinely want to see you succeed.
So if you have a plan you want help with, pick up the phone and talk to your local Crediflex Partner today.
By Duncan Brown
While every care has been taken to supply accurate information, errors and omissions may occur. The information in this blog provides general information and is not intended to be financial advice. You should consult a professional financial adviser before making any financial decision. You are solely responsible for any loss suffered from relying on information in this blog. This blog is for the use of persons in New Zealand only. Copyright in this blog is owned by Crediflex.
