With rising rates of interest how interested is your accountant in your commercial borrowings?
The news focus may be more on the rising cost of domestic borrowing, but with interest rates increasing how is your business faring in managing its borrowing?
Higher commercial borrowing costs might discourage many businesses from undertaking new projects or expanding operations, leading some to reconsider their plans for growth. So the right advice is vital.
As a trusted advisor, your accountant can be a significant asset to your decision making when giving due consideration to the altering of your commercial borrowing, or indeed when you're applying for finance in the first place.
As your business evolves your finance needs will change. So, reviewing your commercial borrowings is an essential ongoing task to ensure your company's financial health and to continue to make informed decisions.
At GSM we consistently work with our clients to guide and advise how wise it is to maintain current borrowings in the context of business performance, market conditions and the business' capacity to pay back existing and potential debt.
Your accountant should similarly know your business well and be able to arrive at the ideal borrowing strategy for you, based on your situation and plans. So, even if market conditions support your plans for the business, your accountant can assess your current and projected cash flow to help you determine the amount of money you can afford to borrow. For example, It may be wise to reduce your short-term borrowing needs and optimise cash flow, rather than extend your level of debt further.
Alternatively, because your accountant works with many other businesses, they can also often share some financing best practices, providing industry benchmarks so you can compare your finances to similar businesses to give you sufficient comfort to proceed with an application or alter your plans.
In short, the amount of money you think you need may be different from what your accountant sees.
Reviewing commercial borrowings is an ongoing role and it's essential to regularly monitor and manage your business's debt situation to consistently make informed decisions and maintain financial stability. If your accountant isn't doing so, it's perhaps time to speak to GSM. Contact us today on 020 7935 3793