Bank Finance Needed to Support Your Busines
Most applications are denied bank financing, because customers are poor credit risk, but because they have approached his bank without preparation. Succeed in communicating the right information the first time.
CASHFLOW data to understand and manage their working capital (debtors, creditors and equity) and enough money to protect the interests of the bank (to cover costs and other related programs, such as taxes, dividends and replacement) . no “Cash is king”, and even profitable companies can, if the money did not succeed. Understand cash flow and you can not ask for less.
OUTLOOK The current forecasts, and to order the required amount, payback period, risk and profitability of the bank. The numbers should be more stringent than expected sales and profits and, ideally, should show the relationship between income, balance sheet and cash flow. Sensitivity analysis is important to understand the bank if not paid. If projections should always be based on current data.
MARKETS Explain your market. Approach to explain 20% of their efforts, what has happened and move 80% of what you expect and why. Do not worry, economists are wrong sometimes. The point is to show the bank that you thought it looked the most likely outcome, and you have a clear action plan.
MIX AND QUALITY OF CLIENTS data with customer names / industry / region contract duration. The strength of their paying customers and its capacity is the strength of your business. Build your business around the business risks of a client.
UPDATE, the bank until the management information of the time, especially if the financial statements dated. The information must be provided at least quarterly, divided by the division or region and earnings, balance sheet and cash flow losses. Management of information used to update data for estimates of t and all differences must be explained.
NEED FOR LIQUIDITY the bank that your company is liquid and can survive. Tell them how long their hands on the money and knows that debt maturity, credit terms and cash assets. Think of a simple ratio of assets liabilities and consider the current liquidity situation is ideal. Remember, cash assets for too long can generate higher returns elsewhere.
INCOME Know your financial definitions BENEFIT. Talk about gross profit, operating income, net income or EBITDA (earnings before interest taxes depreciation and amortization)? All are common in the financial analysis of companies. Also, be sure to discuss the seasonality and cyclicality in the industry.
COMPETITION Tell the bank CONTEST how you feel about your competitors? Be prepared to discuss the strengths and weaknesses of their competitors. This gives confidence that a proactive management team who really understand business.
ACTIVITIES failure of your business / division and tell the bank, whose activities are good results and a bottomless pit, and why. Explain how the divisions complement or overlap each other and the strategy of each. Be ready with the prediction, if necessary.
TRACK RECORD also starting to offer at least 3 years to get a bank account (ideally 5 years, to approach a new bank) and to date management accounts. The bank requires this data for financial analysis of the evolution of key figures and margins. It will also give confidence in their monitoring of file management.
EQUITY, DEBT AND THE BALANCE SHEET, Stocks, bonds and Communicate BALANCE risks (equity / loan officers) against the risk of the bank. Do you know the true strength of their balance of current market value of the assets of the hand and all the details of the debt (including off-balance sheet exposures, such as leasing and guarantees). Be clear from the start that security is not available.
