Lenders are increasingly calling in specialist advice in a bid to identify the extent of business debt, an expert has warned.
And Adam Simpson, national director of receivables management at the Birmingham office of international accountancy firm Mazars, said sometimes the true position was grimmer than either the banks or the company concerned appreciated.
Part of that was down to too many taking their top customers for granted.
A failure to do so could be a matter of life or death to a business, he cautioned.
The issue is one that has emerged as a cause for concern, with Mazars and others being brought in by the likes of banks and asset-based lenders to check out companies and assess debtor books.
And that has seen a rising tide of work on debt collection, credit management and reviews of people, systems and processes.
Mr Simpson said: “Essentially we are assisting lenders understand the debtor books and, in essence, their security.
“Banks are increasingly looking for a second pair of eyes when it comes to handling businesses. They have been stung in the past and are making great efforts to ensure that does not happen again. Which is where experienced advisers like us come in. We can offer them a more complete picture on which to act.
“Sometimes it is hard to see the wood from the trees. We can go in unencumbered; without the baggage of having to run the business day to day. We can give the lender a different focus on the position and get to the heart of any problems.”
Rarely were advisers now sent to do major reviews of a company as was more common perhaps five years ago. “Instead we tend to be asked to speak to the directors, go through the options with them and prepare a short report. Lenders want your gut feeling on the business.”
Understanding the main customer was very much part of this.
Mr Simpson said: “It is very easy to take long-standing customers for granted and too many firms drift into this.
“They need to be working much closer with them and understand their customer’s business and where it is headed. For example, if they are having a hard time and were to go insolvent, it could have a very big impact on you, threatening the existence of your own company.
“Alternatively they may be looking for better value for money and suddenly you find you have lost the contract and it has gone to a rival. Meeting the needs of the customer is vital.”
And looking after existing customers was only one of the factors.
“Existing customers are only half the battle; you need to get out there and find new ones.”
