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We Are Familiar with the Problems
of Businesses with Problem Narrative -Business capital is the foundation for economic growth and survival. Besides being a “buffer” against unexpected losses, adequate capital provides for smooth operation of the business. While no amount of capital will protect against weak management or poor business processes, even the best management may make mistakes or be confronted with the possibility of unexpected losses. Inadequate capitalization leads to disruptions of payments and ultimately the continuity and focus of the business. Inefficient allocation of capital is often evident in situations where: · Credit is overextended · Stretching accounts payables (especially beyond 90 days) · Trade creditors unwilling to advance credit, reduce available credit or significantly tighten terms under which willing to continue to do business · Not able to take advantage of available early payment discounts · Drawing all available lines of credit down fully · Reduction in lines of credit · Consistent inability to increase or raise additional liquidity · Little or no margin for error in managing cash flow · Inability to make timely deposits of trust funds · Inability to service long-term debt requirements · Multiple instances of insufficient funds checks |
