A CEO's Guide to Safeguarding Financial Stability

By: Alan Chaffee

In times of volatility, a company CEO must stay ahead of the game, anticipating any and all impacts on financial stability. Factors like shifting customer demand, supply chain disruptions, high interest rates, and inflation, compounded with tightening credit markets, regulatory changes, liquidity crunches, and workforce challenges create a complex business environment. Among these challenges, one of the most critical variables is a lender’s evolving risk appetite.

As the economic landscape continues to shift, so does a bank’s willingness to extend credit. Lenders are adjusting credit-making decisions based on both broad economic conditions and the specific financial health of individual borrowers.? What was once a reliable credit line may now come with unexpected requirements, forcing the CEO to rethink financial strategy.?

The first sign of trouble often comes subtly, perhaps an email or phone call requesting a meeting to discuss the company’s financials. But make no mistake, this is more than just a check-in. The lender is considering tightening its grip and looking for answers or information. The lender may send a default notice, or it might simply take steps to reduce available credit or demand additional collateral. Suddenly, the lifeline that once fueled production and growth now feels like a noose.?

The real danger, however, lies in the fine print of the loan agreement. Hidden within the agreement are the loan covenants.? These are the metrics that the lender uses as an early warning signal.? The debt-to-EBITDA ratio, debt-to-equity ratio, fixed charge ratio, current ratio, minimum liquidity thresholds, and working capital requirements. A best practice for companies is to track performance against the bank’s covenants, as outlined in the loan agreement, as part of the monthly financial reporting package. This ensures that if the company approaches or breaches a covenant, the CEO is the first to know.? Such monitoring serves as an early warning signal, alerting the CEO to potential financial instability and the possibility that the bank may reassess the company’s risk profile, leading to actions to mitigate its perceived risk.?

When markets are stable, these conditions may seem like routine financial housekeeping. But when volatility strikes, every decimal point matters. If sales dip unexpectedly, losses begin to accumulate, a key supplier delays delivery, or a key customer delays payment beyond 60 days, the company could find itself breaching a covenant. And that breach could trigger a domino effect—higher borrowing costs, forced renegotiation, or even an immediate demand for repayment.

Liquidity becomes king in these moments. The lender will scrutinize the company’s cash flow like a hawk, watching for signs of strain. A backlog of unpaid invoices? A slowdown in inventory turnover? These could be red flags that prompt the lender to reassess risk, limit access to credit, or tighten payment terms. The CEO must remain two steps ahead, ensuring there is enough cash on hand to weather the storm, even if that means making tough decisions—cutting costs, delaying expansion, or renegotiating supplier agreements.

And then comes the unspoken risk—the loss of lender confidence. This is when the tone of conversations changes, when meetings feel more like interrogations than discussions. The lender is no longer just a financial partner, they are now an overseer, questioning every strategic move, pushing back on capital investments, and demanding more control over business decisions. If trust is lost, refinancing existing debt could become an uphill battle, and the company's ability to operate freely may be severely restricted.

For the CEO, survival means staying proactive, maintaining open lines of communication with the lender, demonstrating financial discipline, and acting in good faith and with transparency. When a lender has lost confidence or is fatigued with a borrower it may be time to source another lender or, if necessary, look for alternative lenders such as asset-based lenders (ABL), factoring, or private lenders with a higher threshold for risk.?

In today’s world, the CEO’s greatest challenge is more than managing the company, it’s managing the financial relationships that keep it running. Success is not just about reacting to the lender’s actions, it’s about positioning the company strategically to maintain financial stability and control. By monitoring covenants, maintaining liquidity, and keeping financing options open, the CEO can stay in command of the game.

TRANSFORMING YOUR BUSINESS: WORKING CAPITAL HACKS WEBINAR

Optimizing working capital is essential for improving cash flow and maximizing profitability. Many businesses struggle with inefficiencies in their cash-to-cash cycle, which can limit financial flexibility and hinder growth. Together with Waypost Advisors , we explore key aspects of working capital management and cover essential KPIs that can help businesses pinpoint inefficiencies and implement actionable tactics to reduce receivables days, streamline inventory, and optimize payables.??

Whether your goal is to accelerate cash collection, improve supplier payment terms, or refine inventory management, this discussion provides practical strategies to strengthen your working capital position. Watch now >>

Maximizing Profitability in a Manufacturing Transaction

For manufacturing business owners, a successful business transition is not just about achieving maximum value but also preserving a legacy of hard-earned success that remains beneficial to the employees who have contributed. However, today’s economic landscape presents significant challenges, including high interest rates, inflation, a shrinking labor pool, shifting global trade, and political uncertainty. These factors make positioning a manufacturing company for a smooth transition and sustained success more difficult than ever, demanding strategic planning and effective management. To remain profitable in this environment, manufacturers must operate with precision, optimizing pricing, efficiency, and financial planning.

In this article,? Brian K. Grant outlines strategies for securing a profitable exit. Read Now >>

WELCOME, JACOB!

Turning Point is excited to announce its second new hire of 2025 with the addition of Jacob Swerland . With a diverse professional background and a strong commitment to exceptional customer service, Jacob brings a solution-focused mindset and a drive for continuous improvement to his role as a financial analyst. ?

Jacob graduated from the University of Colorado Boulder with a degree in Finance and Entrepreneurial Studies, complementing his academic foundation with hands-on experience. His career includes a corporate finance internship in Dubai, where he worked within a global pipeline manufacturer, and as a Customer Relationship Advocate at Fidelity Investments, where he also earned FINRA SIE, Series 7, and Series 63 certifications. Jacob’s versatility and ability to thrive in dynamic environments, including his time as a commercial fisherman in Alaska, highlight his strong work ethic and adaptability.

“We’re thrilled to welcome Jacob to the team,” said Alan Chaffee, CEO of Turning Point. “His diverse experiences, strong analytical skills, and dedication to problem-solving make him an invaluable addition as we continue to innovate and grow.”

In his new role, Jacob will focus on financial forecasting, reporting, and operational metrics tracking - key areas that support strategic decision-making and operational improvement. He will collaborate closely with Turning Point’s leadership to deliver financial insights that drive client success and optimize internal processes.

“I thrive in fast-paced, team-oriented environments,” Jacob shared. “Joining Turning Point gives me the opportunity to not only contribute to the firm’s growth but also make a meaningful impact on our clients’ success stories. I’m excited to bring my skills to the table and learn from such a talented group of professionals.”

When he’s not traveling between Denver and Seattle, Jacob enjoys skiing, discovering new music, and supporting local businesses.

Unlock Kristina Angel 's expert tips to stand out in a competitive job market with a well-crafted resume. Download your free copy, which also includes an example resume.

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