Creating Cash Flow for Overdraft

[MrMen]

Hello Guys

I wonder if anyone can help me, we have been trading for around 14 months and have done our accounts etc.

Up until now we havent needed any funding as I was lucky enough to have some pennies in the bank. I have just moved bank and have a meeting shortly to discuss an overdraft, the business manager tells me usually they base your facility on 10% of your annual turn over.

That seems quite odd to me, but nontheless I am preparing my cash flow chart I can see what O.D I need as my chart tells me in big red letters that by May I will be overdrawn but this does improve again in July.

Now I could actually buy less stock and do less advertising to prevent this if I really had to but last year has taught me I would lose momentum and likely miss some targets where sales & market share are concerned, so I'd like an overdraft so I can press on.

Now the question I have is if I present my cash flow to the bank with these minus figures how will they respond? The reason I ask is because most of the people I have spoken to at atleast 3 banks seem to have virtually no REAL business experience.

They seem to type the figures into their systems and if their particular KPI's aren't met, they respond invariably with "we can't help you"

Thanks in advance....

 

The general feedback we are getting is that banks are mainly underwriting by tick-boxes.

Have you looked at other types of business funding - in particular invoice finance. If you are in the right type of business, this could be less onerous for you and will leave bank facilities unused.

If your bank are tuned in, they should point you in this direction - though don't just take their word, shop around..

 

[MrMen]

The general feedback we are getting is that banks are mainly underwriting by tick-boxes.

Have you looked at other types of business funding - in particular invoice finance. If you are in the right type of business, this could be less onerous for you and will leave bank facilities unused.

If your bank are tuned in, they should point you in this direction - though don't just take their word, shop around..

Hi Thanks for the response.

This is the feeling I get also, to be honest my bank manager knows next to nothing I get the impression she used to deal with personal loans and maybe mortgages and has been promoted without any experience or maybe even training.

At some point I will be submitting my application for EFG loan which is a whole different saga all together but for now I would like a reasonable O.D, so if my cash flow shows negative I guess I will be turned down flat?

My other concern is that is my cash flow shows positive balance then the bank could potentially say we have no need for the O.D and refuse to offer it?