Applying For Finance - Lost In Translation
Apply For Finance - Lost In Translation. The first video covering the issues about what is lost in translation when a business applies for lending.
This video focuses on the core problem of what happens when an accountant provides the figures the business is using to apply for finance. It covers what is lost in translation and the difference from what a lender hears to what the business says.
It covers the financial forecasts and why using a high, medium and low set of figures can backfire and make raising finance for your business a whole lot harder.
#applyforfinance #businessfinance #businesslending #businessfunding #howtoapply
Timings
00:14 - The biggest reason why businesses fail to get finance agreed by a lender
00:33 - The BIG thing not to do
01:11 - Why you NEVER give a lender three sets of forecast figures
02:40 - Why you produce your figures and why you only use one set of numbers
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Script:
Hello, Dave Farmer Lime Consultancy, and I want to talk to you a couple bits about lost in translation. The biggest reason why businesses fail to get finance is because they speak a different language to lender. It's old hat to us. We've been saying this for years, but let me give you a couple of examples to make it real. Your accountant produces your figures for you. If a lender asks where your figures are coming from, they're coming from you, please don't say they're coming from your accountant. Don't use the phrase 'My accountant does my forecast. My accountant does my figures' Hey look, they probably do, but don't tell the lender. When a lender hears that, what they hear is not that your accountant is actually really good at supporting your business, what they hear is you don't know your figures and you don't know what's going on.
It's a completely different message. They hear the other thing. On the topic of figures being produced by an accountant is very often when it comes to forecasts, we see three sets of figures. We see a high, medium, and a low or an ambitious, a realistic, and a cautious set of figures. Now for the business owner, that's a pretty good practice to have because you know where you're going to be. If you're on target above target or below target. Great, but it's not good to give to a lender. Let me tell you why. The top set of figures, the ambitious set to lender they don't see ambitious. They see unrealistic. When they look at the conservative set of figures, they don't see conservative, they say, yeah, maybe. Well they then look at the bottom set of figures, which you say of course are a negative set, and they'll say, yeah, that's more likely. What lender then does is sensitises those figures and makes them worse still. So if you're giving a lender, three sets of figures, you are going to shoot yourself in the foot and you're going to make your affordability, whatever, financial raising, much more difficult and actually you made your life yourself a lot harder.
It's one of those things that trying to do the right thing can often backfire and you do honestly end up shooting yourself in the foot. So please does your accountant prepare your figures? No, you do. And do you prepare different figures, yeah, maybe, but they never leave your house or your office and they certainly don't go to the lender. Give the lender the most realistic set of figures. If not, dare I say, be slightly ambitious about them. At least that way you're going to stand the best chance of getting the right message across and getting the funding in place that you want. Hope it helps more tips of for any questions about funding your business. Get in touch, ask away. We'll do all we can with the help. We'll speak to you again very soon.