“Shipping is experiencing tough times. An increasing number of companies are unable to repay or, in some cases, even service their debts. That could mean an uncomfortable meeting with the bank. But too many companies are not properly prepared for such an encounter,” said Paul Edwards, corporate finance director at Moore Stephens.
“Businesses must be able to produce properly documented and timely financial information for their stakeholders, which should include a view of the future. In good times, when charter rates exceeded operating expenses, little attention needed to be paid to future cash flows and debt service. But today, it is essential to be able to anticipate, to the extent that it is possible, future cash flows and pinch points,” he said.
Edwards urged shipping companies to provide banks with detailed information and to anticipate defaults or breaches and presenting a solution.
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