Damian Bell, a partner at Creevey Russell Lawyers and specialist in commercial business, suggested the temptation for many, particularly farmers and agribusinesses, can be to “put up the shutters”.
But with struggling businesses often put on watch lists by their bank or lender, and banks holding an “exit” list of businesses they no longer want as clients, being proactive is a much better alternative than waiting for liquidators to come knocking.
“My number one piece of advice during difficult times is to keep a dialogue with your bank, silence is not golden,” he said.
“Don’t put up the shutters and think they will go away with the next interest payment. By engaging regularly, you will have the opportunity to perhaps stay ahead of the process or at the least be involved in it.”
According to Mr Bell, the different divisions within banks have different risk mitigation and impairment processes. Times of hardship can warrant a business being placed into a different division while they get back on their feet.
“It’s very important to find out if you are on one of these lists and if so, who you are dealing with and why,” he said.
“I call it ‘buzzword bingo’. If you hear things like ‘lending services’, ‘asset management’, ‘recovery’ from your relationship manager, you need to take things very seriously.
“These are the areas of the bank, often described as ‘bad bank’, that handle problem loans.”
Mr Bell said these sections of the banks “have a different agenda than your relationship manager”, and who have more power to grant flexibility and influence bank processes.
Sometimes, however, the relationship can reach a point of no return.
“At the far end of the scale, if you hear ‘end the banking relationship’, you need to understand that you are on the dreaded ‘exit’ list and the process is now one where you need to manage and plan to rapidly find yourself another bank,” Mr Bell explained.