Financial restructuring and debt syndication is an area of financial management & advisory services that focuses on choosing appropriate financial product and changing the existing debt structure of an enterprise. When a SME business needs to access to finance it usually approaches a Bank or Financial Institution for borrowing. This debt could be in the form of a loan, Line of Credit, Non fund based lines etc. depending upon the purpose of requirement.
However since banks provide a number of loan products ; they advise products which are easily accessible and offer good returns to them rather than evaluating the appropriate type of funding .This is where financial advisory becomes crucial in selecting not only the lender but also the appropriate financial product to satisfy the business needs besides the terms of debt.
There are a large no of businesses in the SME space which find accessing debt from financial institution equivalent to an ordeal. They incur costs, invest time with two to three lenders, engage their finance personal for availing products which they later realise are not suited to their requirements.
The current financial ecosystem is undergoing a transition period which is evident with big consolidation of Public sector Banks, liquidity starved NBFC’s and more cautious private lenders. The overall growth in the economy is slower than expected and the tightening of regulatory compliances are unprecedented. These are times which expose the SME’s financial vulnerability and make a strong case for businesses to practise sound financial management.
The Financial advisory services do come at a cost but are beneficial in the long term and help save small businesses millions besides providing with the necessity professional support to harness new opportunities.
The key aspects of a good financial advisor are his/her Independence, Knowledge and Experience. Financial advisor’s role is to know the exact requirement and utilise his/her knowledge to help the client secure adequate, timely and cost effective financing. Advisory firms actually do more than just advising: they manage the entire process, reaching out to a range of lenders and other potential sources of capital that the client may not have a relationship with, running a competitive process and negotiating on their client’s behalf to get the required funding from the most appropriate source on the best possible terms.
