Whilst many financiers claim turnaround on financing from a few days to a few weeks, these timelines are only a reality if you’re fit and ready to take on the finance.
I’ve seen clients whose expectation to be financed within a week or two was delayed by weeks, if not months, not due to the financier but due to the readiness of the business to submit what a financier needs in order to take a decision - assuming the SME is at the right financier for their needs and stage of business.
What does the financier need?
In a word, trust.
How do you build this trust?
- Show them you know how to manage money, through:
- up-to-date and accurate management accounts and financial statements that you can actually explain;
- up-to-date and accurate debtors age analysis to show who owes you money and that you know how to collect the cash;
- up-to-date and accurate creditor age analysis to show who you owe and that you know how to manage credit and pay on time – remember, you want them to become one of your major creditors; and
- cashflow projections that are accurate and show what you need the finance for, when and why.
- That you have experience:
- Show that you’ve done the job you want to be financed to do in the past and that you’ve done it well – whether that’s building a road or manufacturing a product; and
- Where you as the business owner(s) have a skill gap, that you have a good team that compliments your skills and fills these gaps (some of these skills may be outsourced and that’s ok).
- No business is perfect, but do you know what your challenges (risks) are, what have you done to fix these and are you open and clear about these?
- Are you compliant? Do you pay your bills and keep record of your business dealings?
- That your market trusts you:
- Do you have repeat business? Have you secured a contract or purchase order or is there an intention from a buyer to buy your product or service that you can prove?
- Skin in the game:
- What’s going to keep you up at night to make sure you do the job and make your repayments?
- And what will make a financier “whole again”? Be ready to sign surety and provide the little assets you’ve managed to attain as collateral, get your mind set for this.
Building this trust into your business, to be opportunity ready, should be any businessperson’s daily job.
It’s a misconception that government financiers and grants will overlook these fundamentals.
If these fundamentals aren’t in place a business will struggle to raise the finance it needs, no matter where it goes to find it.
How many of us are truly finance ready? What are you doing about it?