Reorder liabilities and equity for financial headroom

The earlier, the better – ideally as soon as it’s foreseeable that covenants become tight or short-term lines are permanently utilised, not only when there’s a breach. This preserves options for action, and the bank experiences you as a proactive, controlling partner rather than a fire-fighting operation.

Banks need a consistent picture: integrated planning, realistic scenarios, transparency over securities and clear proposals for how the debt structure becomes sustainable. Decisive is that you don’t just ask for accommodation but show which own contribution you make and how the bank benefits from this medium-term.

Payment terms can be extended when you communicate early and openly, contextualise the situation and offer a clear, adhered-to payment plan. Those who engage suppliers with facts, industry benchmarks and a concrete improvement plan negotiate over terms – not over “payment morality”.

Equity creates buffer, improves metrics and signals that owners believe in the company and have “skin in the game”. This increases willingness of banks and suppliers to extend maturities, adjust covenants or grant additional lines.

Central is a clearly structured overall plan with measures, timeline and distribution of contributions that’s presented to all stakeholders and negotiated with them. Transparent communication, regular updates and clearly defined milestones help maintain trust – even when the situation remains strained.

Refinancing primarily replaces existing credits with new ones, often with different terms, whilst restructuring adjusts existing contracts (maturities, interest, covenants, securities). In practice both approaches are frequently combined to relieve short-term pressure and make the capital structure more robust overall.