Originally published: 16/03/2018 14:37
Publication number: ELQ-66308-1
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Forecasting Debt

This video looks at debt, which for most small businesses will be in the form of bank loans.

Most small business will need some form of debt funding. You can have multiple layers of debt with the same provider; each layer or tranche dealing with a different purpose. For example, a cafe may have a mortgage to purchase the property, a chattel loan to fund it's equipment or fittings, a car loan for the company car, and a line of credit that is used for emergency cash shortages. Each of these will have a different set of terms and pricing with the bank, largely reflecting the level of risk assigned to this class of assets by the banks. While debt is often given a negative connotation, having an appropriate level of debt in a business is considered good practice, and an efficient capital structure.

Watch this video to hear more on this topic and how you can avoid slipping into bad debt by forecasting.

Length: 3 minutes 15 seconds

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