How to Access funding
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A recent survey found that of those businesses that had sought new finance from their banks 60% had been declined.
The need for funding does not guarantee access to funding.
A recent survey by the IOD of over 1000 managers found that of those businesses that had sought new finance from their banks 60% had been declined.
It is clear that businesses need to be far better prepared before making an approach for increased funding and to be as attractive as possible to lenders or investors.
A number of key areas need to be addressed:
• One of the highest priorities is the strength of the management team and in particular the quality of the Finance Director. It may be that the existing FD is very good at the day to day issues concerning the running of the business but lacks the expertise of managing a fundraising exercise.
• The business needs to be operating rigorous financial controls including:
o Timely monthly management accounts.
o A 12 month forecast and detailed budget.
o A detailed cash flow forecast.
o Monitoring of Key Performance Indicators.
• One of the key areas will be an analysis of sales and customers and the underlying assumptions built in to the forecasts.
• Timing is crucial. What used to take up to 6 months may well take 9 months or more. This means that if a business is seeking to raise funds the process needs to be started well in advance.
• You need the skills to identify potential sources, manage and negotiate through the process.
How can a ‘flexible’ FD help?
They will understand the requirements and needs of the business and be able to identify the most appropriate funding solution.
They supply their services on a daily basis and can work with your business to facilitate the process.
They can assist with the information pack sought by lenders.
They can ensure that the information likely to be sought by lenders by way of due diligence is prepared well in advance and in format acceptable to lenders.
They can work with the business as part of the management team in negotiations with lenders.
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