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Banking and financing support

As with any business at a certain moment, your organization needs a surplus of financing.

But like any other resource, the financing part/money is limited.

The reasons for additional financing are also very diverse. Usually, you need financing for the following (1) short term financing, (2) working capital financing, (3) expansion/investments.

Depending on the destination of the additional financing you have several options. The very basic alternatives for financing are (1) money/financing from shareholders, (2) use available cash from operations or (3) money/financing from financing organizations.

In this posting I’ll focus on the 3-rd option, getting the financing organization aka banks attention.

It is not that easy as it seems, the banks are not your friend nor your enemy. If you play it smart you can get a big help when you need it in the form of additional needed financing.

To have a bank as financiers you should consider the following steps :

(1) do the assessment of the financing need  again and again and make sure that it is exactly what you need

(2) do a realistic forecast of your short and mid-term business and cash flow. This is extremely important, the reimbursement of the debt is binding, you can not afford to skip it. 🙂

(3) scan the market for financing alternatives that are suitable for your needs. Take care of the hidden costs of financing…

(4) read very carefully the financing terms and conditions

Why are the above-mentioned steps very important?

A financing relation with a bank has its very positive aspects like getting the needed financing and is also very binding from your perspective. Meaning that you will get a chunk of your money taken by the bank as a reimbursement regardless of the business situation.

Let’s try to understand that even if the bank financing is a “cheap” financing alternative you must consider that you also have to provide to the bank a lot of guarantees and assurances.

Let’s assume for exemplification of the increasing complexity that you need for the next years additional financing.

Due to expansion and growth, you need financing for the following aspects

(1) working capital financing

(2)  investment capital

The working capital financing can be broken down in other several financing facilities like AR factoring, OD and contract “factoring”. For the investment capital, you need support for the set and go live of a 30.000 m2 production facility.

As you can see it can get pretty complex to progress through this kind of a financing solution offered from one or more financing organization. This kind of activity is not a daily experience in most companies.

Therefore we recommend that you should get professional help to facilitate and manage the financing aspect of your business.

TopCFO can and will gladly support every inquiry to discuss your financing needs.

Also, we will be more than happy to analyze with you your investment projects and get you the best solution.

For more details, quotations and/or any other questions please get in touch  through Telegram or LinkedIn