Questions Bankers Ask During Financial Reviews

When you’re looking at borrowing options, understanding what goes through a banker’s mind is crucial to your success. These professionals don’t just glance at your financial ratios and percentages; they dig deep. So, what kind of questions should you expect from them?

1. Better Know Your Financial Ratios

Bankers love numbers. They’ll scrutinize your financial ratios to grasp your company’s financial health. You might get questions like:

• What does your liquidity ratio indicate about your ability to cover short-term liabilities? A solid answer will show you understand your current assets against current liabilities.
• How has your debt-to-equity ratio changed over time? This will demonstrate your financial management skills and comfort level with debt.

2. Profitability Speak

Expect inquiries about profitability measures:

• What do your profit margins reveal about your cost structure? Discuss how your business manages costs efficiently.
• How do you forecast future revenues in comparison to your past performance? This stops a banker from raising an eyebrow over sustainability concerns.

3. Cash Flow Conversations

Let’s talk about cash – the lifeblood of any business. Bankers often ask:

• How frequently does your cash flow fluctuate? They want to know if you can maintain a steady cash influx.
• What steps do you take to manage operational cash flow? Giving clear strategies showcases your proactive approach.

4. Risks and Mitigation

Bankers like to play devil’s advocate:

• What risks do you foresee, and how are you planning to mitigate them? Your response helps them evaluate your foresight.
• Have you experienced any significant downturns in the past, and how did you handle them? Specific examples in this area can demonstrate resilience.

5. Your Growth Strategies

Questions about growth indicate a banker’s interest in long-term viability:

• What’s your strategy for achieving growth over the next few years? This highlights not just current performance but future potential.
• How do external factors like economic conditions in Australia affect your business model? This shows your awareness of the bigger picture.

6. Personal Touch

Your unique touch in running the business makes a difference:

• How do you think your leadership impacts the company’s culture and performance? This question digs right into your management style.
• Can you describe your decision-making process during turbulent times? Bankers love to see how you stay level-headed under pressure.

This review process isn’t just a hurdle; it’s a chance to shine a spotlight on what makes your business tick. Remember, answering these questions with confidence and clarity increases your chances of landing that loan.

In a city like Adelaide, that’s a game of numbers, strategy, and personality. So, when you’re ready to meet with your banker, approach the conversation with an open mind and a robust understanding of your financial landscape.