Banking on the right decision

Grahame Maughan argues that you need heavy-hitters on your side when you approach a bank with a view to getting finance for investment. When a client needs to persuade a bank to make a substantial investment in their business, I always recommend that they get their professional advisers involved at the earliest possible stage. Unless you have your accountant on board and get some support in presenting your case, there’s a danger you may end up shooting yourself in the foot. Banks can be notoriously difficult to impress and as they are heavily regulated they can fall back on a tick-box mentality when it comes to deciding on finance if you don’t make your best case. They’ll look at the recent figures and overheads, but can fail to take into account the bigger picture and the great opportunities that can come with investment if these aren’t properly explained. Even with our involvement, the process of convincing the bank isn’t always easy. Different potential funders often ask for information in varying formats. Sometimes banks – despite the preparation of a detailed business case – seem as if they don’t quite ‘get’ it. This is where your accountant’s knowledge of the bank’s staff and the chance to build up a case with them can help. As well as a paper analysis of where the business is heading, you may need to support your pitch in other ways – video that demonstrates the advantages of technology, for instance, and tours of the current facilities. Also analysis of your current and target customers, your competitors and suppliers can help to build the picture. It’s also important to set out your stall right at the beginning. Ask the bank’s local representatives whether they are actually able to make a decision. If you know the green light will have to come from someone further up the hierarchy, politely request that they also come down to your client’s site and have a face-to-face meeting. At the end of the day, a successful request for funding is going come from a partnership. On the one hand, there’s your expertise and knowledge about your business and market place. On the other, there’s the guidance and advice of your accountants and other advisers, who know from experience the best strategies to employ during the negotiations. We can help to provide confidence to the bank if we help with preparation of financial forecasts and assist with the production of management accounts that are the life blood of the bank’s ongoing monitoring system.