Richard Duffy, Director in BDO's Deal Advisory department, recently featured in The Irish Times Special Report on strategic debt and alternative financing choices.
While the first port of call for funds is traditionally the bank, this may not necessarily be the right option for companies taking a strategic approach to debt.
Duffy advices to proceed with caution as the type of finance a business requires, is wholly dependent on where it is in its life cycle.
It depends on where you are with the development of your business and the capital structure of your business at the time you go to raise finance.
Borrowing is only the right choice for companies when it funds growth opportunities, such as expansion or acquiring assets, or when it provides flexibility to manage cash flows.
However, borrowing is only sensible if the business has stable, high-quality cash flow and can comfortably afford the loan repayments, you need to be certain when burdening the business with debt that it will generate a greater return than its costs.
Matching the right funding source to the right project is key, short-term finance for short-term issues and longer-term funding for larger, more capital-intensive projects. Clarity on this is important, as there are more debt funding options available than any time in the recent past.
Read the full article by Danielle Barron in the Irish Times Corporate Finance Special Report by clicking the button below.