Prospects are affected by non-financial factors as well as by financial performance.  Yes, criteria must be met but what else can you do to improve your chances of bank support…

1. Establish an open relationship with your bank – if you have a Relationship Manger ensure they understand your business. Ideally, they should visit and see you in action.  Don’t see meetings as a chore, experienced bankers have lots of good advice to offer for free.
2. Produce quality management information including a Cash Flow Statement, detailed Profit and Loss (with Budget comparatives) and Balance Sheet. Information should be clear and timely with supporting narrative clarifying “why” as opposed to a mere up/down analysis.
3. Understand your cash flow drivers by calculating your debtor, creditor and stock days. This is effectively the normal trade funding gap in your business.
4. Be realistic when preparing your annual Budget – the bank needs to see you can control costs although any internal revenue “targets” should be more challenging.
5. Show you have a clear strategic vision – banks recognise that performance may suffer in an economic downturn but show them what you have done to successfully manage any challenges. Tell them your growth aspirations and back these up with well thought out plans.
6. Produce longer term financial forecasts with cash flows that incorporate your proposed debt structure. Sensitivity analysis can help prove the margin of safety if things don’t go to plan.
7. Show off your great team – tell the bank about their experience and successes. Provide evidence of training, monitoring, recruitment processes and outsourced expertise to strengthen your business.
8. Prove you have a solid management structure – the bank should see that directors and senior management have clearly defined roles, that there is a designated finance role/team and in larger companies a range of executive and non-executive directors.
9. Show you know your market and competitors – focus on the future outlook, anticipated changes and how competitor actions will impact you. The bank needs to be confident you are proactive.
10. Demonstrate that controls exist in your business to mitigate risk including financial systems and procedures to support your business operations, continuity and legal requirements.

Financial data is, of course, important to any bank but your knowledge and understanding of your business and its finances, your commitment to growth, the backing of an experienced team and robust plans, systems and controls are just as key in getting any bank on side.

If you wish to discuss Access to Finance any further, then please let us know.

Our contact details are:

07780 336952 Delphine Paterson FCCA ACIB