Home topics finance finance-cash-flow Cashflow Hot Tips Managing Cashflow 5 reasons your business looks high risk to the bank Guest Author September 14, 2011 Bankers are very judgmental people. They have to be as they are invariably given limited information about their client and are expected to spot clues about credit risk from the basic information available. Get it wrong and the banker might lose their job, or certainly have their pay impacted. If you are displaying any of these “clues” you may wish to think about making some changes to your business if you plan to ever be a great banking customer. Poor Financial Reporting: Probably the number one reason why businesses fail – they don’t have a view of the scoreboard and they don’t know how they are performing. If you can’t put your finger on how your sales went for the last period, how costs compared to these, how profitable each product is that you’re selling, then how can a bank be comfortable either? Your Accountant should be able to assist here. Poor Working Capital Management: Do you know what your outstanding Debtors are and are they paying within terms? Do you know how much inventory you have on the shelf? Is it an excessive amount or reasonable for your sales volume? Are you paying your creditors in a timely fashion? Set KPIs for your team based on expected levels that are positive to your cash. Your warehouse and Office look like a bomb has gone off: