Business Funding Secrets
Business Funding Secrets

Bookkeeping & Financing

 

Has your business applied for a business loan and been turned down? Do you want to improve the probability your business will obtain the business funding you are seeking? Then.... the first step is to get the company’s books in order.

This may seem like a simple and obvious statement to make, however, it is always amazing how many business owners have not maintained their books. They haven’t completed their tax returns, their monthly statements aren’t current, and they don’t have a real grasp of their company’s financial position. Then they wonder why the funding source says “no.” Business funding cannot be obtained on sales hype.

 

Accounting statements are used to account for money already spent and for reporting purposes to the government. Finance statements are the act of taking what has been previously accomplished and projecting into the future where the business is going. It is difficult to have an accurate projection of where the business is going, or if the company can repay a business loan, if there is not accurate records of where the business has been.


Bookkeeping is the orderly process of recording the monetary activity of the business. From the reported activity, assumptions will be made regarding the continuous existence of the business. What assumptions is a funding source going to make when the business does not have current information? If the current financial position isn’t known, how does the funding source project the future financial position?


Businesses requesting funding need to provide the funding source  a very high comfort level the business has the financial ability to service the debt. Without quality information the lender has to take the position of turning down the funding request. Business loans and venture capital investments are only completed when verifiable information leads to a financially sound lending decision.


Tips:


1. Maintaining the company’s books is like maintaining a high performance race car. When care isn’t taken, neither will get to the finish line.


2. Balance Sheets (assets = liabilities + equity) are a snapshot of the company’s current financial position. They need to be up-to-date for the last completed month, and supplied with the funding request.


3. There must be confidence, by all parties involved, in the accuracy of the books.


4. Many business owners are very knowledgeable about their industry and are excellent at developing and selling their product. They should also work closely with the company’s accountant, so they have a clear understanding of the accounting / bookkeeping process.


5. Pro formas, in a Business Plan, are based on the historical bookkeeping data.


6. Supporting documentation should be available that will lend strength to company’s financial claims.

 

 



.

.

.

.

.

.

.

.

.

.

.

.

.

 

Print Print | Sitemap
© Business Funding Secrets