What Really Happens During an Indepdendent Business Review (IBR)
When your numbers are off and you need to restructure banking facilities, the conversation moves from relationship management to risk assessment. I’ve been the CEO navigating this process and the advisor specialist lenders commission to assess whether businesses are worth supporting.
Here’s what actually happens when the credit committee gets involved.
Your Relationship Manager Isn’t Making This Decision
Your RM might have been your advocate for years, fighting your corner through covenant discussions and seasonal cash flow dips. But when things go seriously sideways, the decision moves upstairs.
The credit committee doesn’t know your business like your RM does. They see risk metrics, covenant breaches, and deviation from plan. To them, you’re not a relationship you’re an exposure that needs assessment.
The IBR becomes their way of getting independent intelligence on whether this is a temporary setback or fundamental business failure. It’s not personal. It’s process.
It’s About the Numbers – But Not Just Historical Ones
By the time you’re in an IBR, the credit committee has already seen the damage. They know you’ve missed projections, breached covenants, or burned through more cash than planned. What they need now is confidence in your forward projections.
Can you stabilise cash flow? Are your markets recoverable? The recovery plan needs to demonstrate a clear path back to compliance and sustainable performance.
But projections are only as good as the team delivering them. If your revised forecasts look ambitious, the credit committee will want to understand whether you have the operational grip to deliver this time around.
What Actually Gets Examined
An IBR isn’t a fishing expedition. The scope is usually defined upfront based on the credit committee’s specific concerns. But certain areas get scrutinised in virtually every review:
Current Financial Position: Statement of Affairs showing asset values, debt recoverability, debtor days, and creditor payment patterns. They’re looking for the gap between book values and reality.
Cash Flow and Working Capital: Detailed cash flow projections, working capital cycles, and sensitivity analysis on key assumptions. If you don’t have robust 13-week cash flows, they’ll build them, at your expense.
Market Position and Trading Outlook: Assessment of competitive position, market trends, and revenue sustainability. Are your customer losses temporary or structural?
Management and Systems: SWOT analysis of management capability, operational systems, and organizational structure. Can your finance function actually deliver accurate forecasts?
Security and Recovery Analysis: Bank security cover assessment and estimated recovery outcomes if the company enters administration. What the bank actually gets back if things go wrong.
The irony here is that a strong recovery position doesn’t guarantee continued support. If the analysis shows the bank would recover most of their debt through liquidation, that can make administration look more attractive than a risky turnaround. Sometimes, demonstrating they’d face significant losses in a liquidation scenario actually works in your favour, it makes restructuring the more commercial option.
The findings shape not just whether you get continued support, but on what terms.
They’re Watching How You Handle the Process
The IBR itself is a stress test of your leadership. How you respond tells the credit committee everything about how you’ll handle the next crisis.
I’ve had CEOs try to control every interaction with their team. Others attempt to present a sanitized version of reality. Some become defensive about operational weaknesses that are obvious to anyone who looks.
These reactions are data points. If you can’t handle independent scrutiny when you need their support, how will you handle market pressure when things get tougher?
The management teams that keep banking support are the ones who engage openly with the process. They acknowledge problems before being prompted. They volunteer the difficult conversations. They demonstrate they understand what went wrong and why it won’t happen again.
The Execution Question Behind the Numbers
The credit committee isn’t just assessing whether your recovery plan adds up on paper—they need confidence you can deliver it. This is where operational capability becomes relevant, not as the primary focus, but as validation of the financial projections.
Do you have the right people managing cash flow and working capital? Are your systems robust enough to track performance against the plan? Can you demonstrate you understand what caused the original problems?
The businesses that successfully navigate IBRs present numbers that are both credible and achievable, backed by evidence they have the operational foundation to deliver them.
What Actually Influences Their Decision
The businesses that maintain banking support present recovery plans that stack up financially and operationally. The numbers need to show a realistic path back to compliance and sustainable cash generation.
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But the credit committee also wants evidence you can execute those numbers. They’ll look for signs you understand what went wrong and have addressed the underlying issues. Control of narrative matters because it demonstrates you have a clear grip on the business fundamentals.
Transparency about challenges and how you’re addressing them builds more confidence than optimistic projections that ignore obvious risks.
The Commercial Reality
When your business needs restructuring, you’re not negotiating from strength. But that doesn’t mean you’re powerless.
The bank commissioning an IBR hasn’t written you off—otherwise they’d just call in administrators. They’re trying to understand whether supporting your recovery is better business than crystallizing the loss.
Your job is to make that decision easy for them. Show them a credible path to recovery. Demonstrate that you understand what needs to change and have the capability to execute those changes. Give them confidence that a restructure gets them back to a performing customer, not just delayed inevitable failure.
Most businesses that fail IBRs don’t fail because the recovery numbers are wrong. They fail because the credit committee doesn’t believe those numbers are deliverable or that the underlying problems have been properly addressed.
The credit committee wants to find a way to restructure your facilities. But they need evidence that doing so serves the bank’s interests, not just yours.
If you’re facing an IBR, the key is demonstrating that management has evolved and operational issues have been addressed. Understanding what credit committees actually assess, and preparing accordingly, can determine whether you get the time and support needed for recovery.
