Thanks for your advice.
We have never missed a payment or been late with a payment.
The other businesses were not included as security but were mentioned on the forms when applying for the loan.
The bank was paid in full when the businesses were sold so we cleared our debt with them. Thats why we had no money for the sale of the business and also a large VAT bill for the four businesses also ensured there were no funds left from the sale of the businesses.
Words such as insolvency are worrying me dearly!
The bank has asked for accounts.
Thanks for all of the above replies, they have been most useful.
The bank has indeed got in touch and are asking for copies of the last two years full accounts. We also have to fill in two rather lengthy forms.
Personal Asset / Liability, Income and Expenditure DetailsBusiness Asset / Liability Statement
My main concern is when we borrowed the money to buy the business in question, we had four other business that were doing OK until the recession hit and caused the failure of those four businesses. They were sold and we made no money from their sale.
Currently our only assets are this property and our house!
So I am am not sure how the bank will react to this!
On the other hand we have never missed a payment and never gone overdrawn, we do not owe any suppliers and the only debt we have is our mortgage and the loan for this business.
We have identified that some prices of our product line would have attributed to the drop in GP. But this would not have caused such a massive drop in GP on its own. Which is where I believe pilfering came into the equation.
We have now increased our prices between 10% to 25% depending on the product.
We have also had installed a rather neat till monitoring system which will record video and make a log on a dedicated computer whenever the till draw is opened.
We have also installed further CCTV cameras where stock is stored that was not previously covered by any CCTV.
The building we purchased includes two businesses, one we run and which the bank are enquiring about, the second is another business that we lease but will be taking over in January 2013. The building also includes a 5 bedroom flat on one floor and the top floor consists of another flat that we use for staff accommodation.
I will also be informing the bank that we are taking over the other business in January 2013 which is in the same building which we own.
This will increase our turnover substantially as that business has been established for 25 years and does not appear to have been effected by the recession.
We also have plans for a further restaurant in the same building once (if ever!) the recession ceases. We will be converting the 5 bedroom flat into a restaurant, it is a substantial building.
As regard to keeping an eye on things. We are to prepare weekly management accounts with Excel. I have also created several spread sheets which will calculate GP on specific products. Hopefully these will be able to map out any trends and identify if there is a problem with any of our products.
Apart from the above, I am not sure what else I can tell the bank to keep them happy.
I just sincerely hope that they do not decide to withdraw the landing facility!
What are your thoughts?
Thanks very much for your replies :)
The real reason for the drop in GP is unclear yes.
Prices were increased at the beginning of the season inline with the VAT increase and other price rises so it is not that.
Till prices have been checked and checked again, and also the accounts have been checked several times.
I think the sales not going into the till went into the employees pocket. As there is no discrepancy with money taken and banked. Well a few pounds but not enough to substantiate this type of drop.
Everything else checks out so it can only be down to pilfering.
Sadly I cannot prove how much money the employee has taken, or when they started to not register sales. And yes, they were served with their P45 rather promptly!
The same member of staff had been caught giving free food to his family members. Whats to say that he wasn't selling my stock behind my back? Again I dont have substantial proof to do anything about it.
We have since installed a CCTV system which covers the till and other areas. We are also considering a till monitoring device which records video when ever the till draw is opened.
I think the best thing to do is to do as suggested and meet with the bank to discuss the matter.
Thanks very much for your time :)
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