Choose your accountant carefully when applying for funding

Published on Business stage: Scaling, Starting, Thinking, Unlocking

Accountant Andrew Moss, of DSG Chartered Accountants, discusses the importance of choosing the right accountant when looking for funding.

The UK’s financial landscape is continuing to evolve, with the emergence alternative lenders and challenger banks. Your local bank, meanwhile, can no longer necessarily be relied upon to back your business, which has been the case for some time.

While some of the new funding providers have a different outward look to their operations and, in some cases, have shifted to the cloud, they still generally want to see the same information.

Most lenders will require a suite of information to support any funding application and, without this, you will not progress much further. They’ll want to know who is borrowing, how much they want to borrow, why they are borrowing, how they will repay and what security can they offer. This is where your choice of advisor or accountant is key.

An accountant should seek to understand a business and not just focus on statutory requirements. Some accountants will be good for a low-cost compliance service but may not necessarily have the knowledge or experience to help a growing business in its wider needs for funding and advice.

Accountants that specialize in funding understand the needs of the funders and are able to work with businesses to present their financial information in such a way that will demonstrate an ability to repay the funding sort. They appreciate the need for up to date accurate management information and financial forecasts and can to work with the business owner to produce this ahead of speaking to funders.

Provision of accurate and timely management information and figures are key, as are the appropriate systems being in place in order to produce them.  This is where your accountant or advisor can add real value by getting you into shape and helping you be ‘lender ready’.

With regular management information to hand, you can make informed choices for your business and a lender or broker can potentially get better terms and conditions when you require finance. Depending on the funding you require, you might be asked to provide the following financial information:

  • Annual accounts
  • Management accounts
  • An up to date list of aged debtors and creditors
  • An up to date asset register detailing the identity of the asset, those assets subject to finance agreements, and the finance outstanding
  • Details of the last 3 months Bank statements
  • Details of the last 2 quarters VAT
  • Cash flow forecasts

It is always preferable to seek out a qualified accountant, either Chartered or Certified. There are, unfortunately, some who operate as accountants but are not qualified and can ultimately do more harm than good if they do not fully understand accounting and taxation rules. If undertaking a fundraising exercise or any kind of corporate transaction, you should seek an accountant with experience in the relevant area who can lead you through whatever it is you are doing.

It’s important to choose an accountant who understands your business and can produce the information you need to help run your business. A well-suited accountant should form part of the business owners team, becoming a trusted advisor developing a good knowledge of the business and the direction in which the owner wants to take it.

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