TOOL 5.0
The Banks View of the Company
First perform the “7 steps” then:
| 1.What is the immediate cash flow? | Needs? Inflows? Can we control? How? |
| 2.Identify the Causes (Tool Pl 5.1) | Immediate – what is using cash? Medium/Long term – what are the fundamental problems? |
| 3.Is the company in crisis or is it adopting the correct strategy for recovery? (Tool Pl 5.2) (Tool Pl 5.3) | 10 strategies can be used for corporate recovery: a. Change of management b. Strong financial control c. Organisational change and decentralisation d. Product/market reorientation e. Improved marketing f. Asset reduction g. Cost reduction h. Debt restructuring i. Growth via acquisition j. Investment (a./b./f./g. are most common.) Strategies may be used in conjunction with one another. Assess impact on future cash flow ‒ Certain? ‒ One off or continuous? Link choice of appropriate strategy to: ‒ Position on the Time Crisis Line ‒ Causes ‒ Company’s historic strategy ‒ Industry cycle ‒ Flexibility of Company’s cost/price structure |
The Banks view of the Company will help determine the choice of option – A Structured Approach to Handling Problem Loans (3)
