If you want your finance provider to do the right thing by you, it is important to do the right thing by them—while it may be tempting to put on those rose-coloured glasses in the current market, you must be honest and keep the bank accurately informed of your business performance.
If your business is not meeting its targets do not leave it too late to inform your funder. Don’t wait until you have exceeded your funding limits or let your funders find out by themselves that your customers aren’t paying. By not being upfront about the performance of your business, you will lose the trust of your funding manager and they will be unlikely to be in a position to negotiate with you or provide you with alternative repayment options.
At The Accounting Department we have developed strong relationships with the leading funding providers. We have a reputation for providing honest and up to date performance data on behalf of our clients. Funders trust us, knowing that the data we provide is impartial and presents an honest account of business performance. This puts us in a strong position to negotiate interest rates and funding options on behalf of our clients.
At one time the funder was concerned about the business performance of one of our new clients, who was not meeting the targets outlined in their business plan. From analysing their budget, we could see that their targets had been set unreasonably high and were based on projections that did not eventuate. We revised their budgets and targets to reflect what was more realistically achievable in the current market and presented these to the funder, assuring them that the company was on track to meeting these outcomes. The funder was then satisfied that the business was performing well and they continued to provide funding at the favourable rates that they had initially extended to our client.
By keeping the funder accurately informed of your business performance, and maintaining a strong relationship with your client manager, you will be in a better position to negotiate reduced rates when your business is performing well, and your funding provider will be in a better position to help you when times get tough.