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Whilst financial markets have been through a lot of changes in recent years (banks in particular) and there is more to come, it is good to know that some things never change. One lending covenant, or financial covenant, which has regained favour in recent years is the old question “how much debt should I have relative to my cash flow?”. This is known as Gross Leverage Ratio. Gross Leverage Ratio formula Total Debt ÷ Rolling 12 months EBITDA Total debt includes all external/bank term debt facilities. EBITDA = earnings before interest, tax, depreciation and amortisation. As a rule of thumb,...

If you ever have the misfortune to be sued for non-payment of an invoice/debt, it’s important to know what steps to take to allow you to remove reference to the court proceedings from your credit record when the matter is resolved. The difference between dismissed & discontinued Ledge Solicitor’s Price Sierakowski have recently spoken to us about the difference between having an action dismissed or discontinued. There is a world of difference between the two: Credit reporting agencies will generally erase all mention of an action if the action has been dismissed. This isn’t an automatic process. It requires the...

What value do you provide to your clients? These are questions that many business owners are unable to answer, and yet having the capability to add value is one of the most important factors in business. Let’s take purchasing your morning coffee as an example You go to a particular café most days but today the café that just opened up next door catches your eye, so you decide to give it a go. What harm can it do, right? Your coffee usually takes a while because everyone has the same idea as you at this time of day, however...

ATO payment plans Anyone in business would agree that with the current economic climate, many business owners/ managers are suffering from a never-ending headache, trying to manage their cash flows. Having tight debtor collection policies in place is a fantastic way to start, however unless you have solid cash reserves, you may find yourself juggling payments to your creditors at times. In these circumstances, we see many business owners enter into payment plans for their tax obligations with the ATO (Australian Tax Office). Is this a good idea? Firstly, the benefits of using the ATO as your banker: It is...