I was reminiscing with a client recently about how different it used to
be trying to raise finance from the bank, prior to the credit crunch.
Just over ten years ago our business moved office and had a lot of expenditure
upgrading the premises, which put a strain on our cashflow. To help tide us
over a quick email to our relationship manager outlining the financial
projections of the move and the impact on our cashflow forecast moving forward,
followed by a lunch, was all that it took to secure a 12-month loan, at a very
reasonable interest rate and low arrangement fee.
The next day the paperwork was signed without any need for endless
security, and by the end of the week the money was in the bank. I can always
remember the manager’s words at the end of lunch. “Colin, you won’t let me down
will you?” Well no, I didn't let him
down, and the loan was paid off in full over the 12 months as forecast.
How things have changed since the credit crunch! I know that banks are
constantly saying they are open for business, but I cannot imagine a loan being
granted at such short notice these days on the same terms.
One thing that still remains constant though, is the need for robust
forecasts, both profit & loss and cashflow, that allow business owners to
plan for the future.
These forecasts are vital if a business is looking to invest in new
products or services, and if a bank is going to grant a loan they will want to ‘stress
test’ a company to ensure that it can afford the repayments, as well as having
necessary security in place.
Having a Finance Director within your business, whether full- or part-time,
who is adept at putting these forecasts together, will help your company to gain
considerable credibility with the banks and help secure funding. I believe this
so strongly that I now work part-time with small businesses as an Associate at
South West FD (SWFD), in addition to my long-standing role as Chairman and
Finance Director within my own business, Target PR.
As the UK hopefully continues to recover there is likely to be more
borrowing requirement to boost the economy. So let me unashamedly plug SWFD,
which has a number of Associates who can give businesses
financial credibility by putting in place budgets, forecasts and cashflow
statements that will ensure you will be in the perfect position to approach
either a bank, or external investor, to raise funds and move your business
forward.
Colin Spencer
Chairman
