Credit

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Credit advice for SME's

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Credit

  1. 1. Credit, a mission impossible?<br />www.fincoach.be<br />Slide 1<br />
  2. 2. SME’s are facing…<br /><ul><li>More competition
  3. 3. More uncertainty
  4. 4. More volatility
  5. 5. More regulation
  6. 6. More highly demanding customers
  7. 7. More (financial) pressure</li></ul>Thus: financial figures tend to be worse/more irregular which makes banks less willing to support<br />www.fincoach.be<br />Slide 2<br />
  8. 8. …and the banks…<br />Until 2008 strategic focus:<br /><ul><li> Obsession with return on equity /share price
  9. 9. Improvement of balance sheet
  10. 10. More important role for compliance
  11. 11. More efficiency
  12. 12. More cross-selling (insurance, private banking,…)</li></ul>Key issue:<br /><ul><li>Regulation on credit business (Basel </li></ul>www.fincoach.be<br />Slide 3<br />
  13. 13. 2008 and beyond…<br /><ul><li>Financial crisis
  14. 14. Banks facing themselves liquidity problems
  15. 15. (New) credit only for prime customers
  16. 16. Economic crisis
  17. 17. Makes banks more cautious and more careful
  18. 18. Procyclical: the credit policybybanksin itself is sharpeningthe cycle (upward and downward)</li></ul>www.fincoach.be<br />Slide 4<br />
  19. 19. The results…<br />Credit no longer ‘obvious’<br /><ul><li>More objectiveness in the credit application (ratings)
  20. 20. More information on past, present and future
  21. 21. Stricter criteria, higher margins, more collateral and guarantees, shortening of loan periods
  22. 22. More equity required</li></ul>Overall, banks are demanding a more professional approachfrom their customers! <br />www.fincoach.be<br />Slide 5<br />
  23. 23. The credit decision<br /><ul><li>Based upon facts, figures and outlook
  24. 24. Pay-back capacity, improved with guarantees
  25. 25. But: banks still base decisions on the past!
  26. 26. Clear business plan /strategy
  27. 27. Proof of how the business can generate margin
  28. 28. Strategy, markets, competition, swot-analysis,…
  29. 29. Track record</li></ul>“ Failing to plan is planning to fail”<br />www.fincoach.be<br />Slide 6<br />
  30. 30. Unfortunately…<br /><ul><li>SME’s are not aware of the new needs of the banks
  31. 31. They think it’s the economic crisis
  32. 32. Finance often delegated to accountants or book-keepers and thus no feeling with banking attitude
  33. 33. SME’s and traditional financial advisors underestimate the consequences of the new credit policy </li></ul>www.fincoach.be<br />Slide 7<br />
  34. 34. Concrete tips & tricks<br /><ul><li>Figures:
  35. 35. Balance sheet, P/L not enough management figures
  36. 36. Budgets and forecast cash planning
  37. 37. Focus on cash flow operational cash flow
  38. 38. Sensitivity analysis
  39. 39. Cost analysis and cost control
  40. 40. Objectives!
  41. 41. Follow-up and monitoring are important</li></ul>www.fincoach.be<br />Slide 8<br />
  42. 42. Concrete tips & tricks (2)<br />Private vs business:<br /><ul><li>Ultimate goal for company owners: create private wealth
  43. 43. The company is the ‘instrument’ that generates the cash, but:
  44. 44. Banks want the company to be in a healthy financial position and try to limit the transfer of cash out of the company
  45. 45. Accountants advising on optimisation should be well aware of the dangers. </li></ul>www.fincoach.be<br />Slide 9<br />
  46. 46. Concrete tips & tricks (3)<br /><ul><li>Makesureyourpersonal lifestyleisin line with the business
  47. 47. Don’t use the maximum of tax possibilities (might bring more harm than benefits)
  48. 48. Don’t mix company assets with personal assets
  49. 49. Keep things separated, so no personal guarantees !!</li></ul>www.fincoach.be<br />Slide 10<br />
  50. 50. More tips & tricks…<br /><ul><li>The book on credit for entrepreneurs, published by Lannoo in July 2010 will give a lot more details on all the relevant credit aspects and contains a lot of tips and tricks for improving the financial health of an SME
  51. 51. The book also gives a complete overview on the tools the governement provides to facilitate and to help the companies in their financing needs
  52. 52. There is a new role for the financial advisors!
  53. 53. Make sure your company is financial fit and implement a strategy
  54. 54. Improve your relationship with banks by using a professional approach</li></ul>www.fincoach.be<br />Slide 11<br />

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