In restructuring, the most expensive mistake is arriving late. Companies typically act after the payment blockage has already happened, cheques have bounced and enforcement has started. Yet the strongest card at an FYY table is that you can still pay.
What an early arrival buys
A company that comes to the table before its cash flow breaks is not treated like one that has already stopped paying. In economic terms the difference shows up in three places:
- You own the narrative. You define the problem and propose the solution, rather than defending yourself against the creditor's diagnosis.
- The toolkit stays wide. Low-threshold instruments such as maturity extension and grace periods may still be enough, so you are not forced into requests that require unanimity.
- New money remains possible. Additional credit goes to a company that is still operating, not to a production line that has stopped.
How the cost of waiting accumulates
Delay is not just an interest charge. Supplier terms shorten, cash-in-advance requirements inflate the working capital need, qualified staff leave and the collateral pool runs dry. Each of these increases the size of the concession you will have to ask for when you finally sit down. Waiting does not make the solution cheaper — it makes it more expensive.
Early warning signals
If several of the following are true at once, it is time to assess FYY before you actually need it:
- 01Short-term financial debt is growing fast as a share of total financial debt; long-term investment is being rolled on short-term credit.
- 02New credit is being drawn only to close old credit.
- 03Collection terms are lengthening while payment terms shorten; the cash conversion gap is widening.
- 04The risk of breaching financial covenants is becoming visible.
- 05Operating profit is intact, but interest expense consumes all of it.
The analysis to run before deciding
The answer to the timing question is hidden in your debt structure. How much sits with financial institutions and how much with the market? How many institutions are involved, and will the distribution of claims carry the thresholds? A decision to "wait and recover" taken without that picture is not a strategy — it is postponement.
Our position is straightforward: the best restructuring is the one designed before it becomes unavoidable. Build the plan around your operating cycle and cash flow, define the need precisely, and come to the table from a position of strength.
This article is general information and does not constitute legal advice.