Get funding ready – Our guide to the three essentials

A business at any stage in their evolution can be looking for funding. Whether this is equity, loans or grants you’ll need to have 3 pillars of financial information as part of the application process.   To improve your chances of success, get investment ready.

3 things you’ll need when applying for funding – these tell the story of your past, present, and future.

The Past: Last filed accounts

Other than start-ups, businesses will have statutory financial accounts for their latest year end. These are the financial statements that are typically produced by an accounting firm and submitted to Companies House.

These statements give a good, if summarised, picture of the past performance of the business and how, “healthy”, that balance sheet is i.e. if you have more assets than liabilities. They are also used by agencies such as Dun and Bradstreet and Credit Safe to indicate your business’s credit rating.

Most smaller companies only file abbreviated accounts at Companies House.  This means that no Profit & Loss information is shown, only the balance sheet.  A funder may refer to the “full” accounts.  These are the set for the owner, typically with a detailed Profit & Loss on the back 2 pages. There is legislation going through now that will require all companies to publish a Profit & Loss statement within their filed accounts, the date and detail not yet known.

A business has 9 months after the financial year end to file their accounts.  It may be that the last filed accounts are up to 21 months old e.g. at July 2024 a company with a December year end will have filed December 2022 accounts but the December 2023 accounts aren’t yet due. The funder will want the December 2022 full accounts and a draft of December 2023 if available.

The Present: Management Accounts

So what happened in the months between the year end of the last filed accounts and where you are now?  To bring the story up to date a funder will want management accounts.

What are management accounts? The legal requirement for a Director is to keep “proper accounting books and records”. Monthly accounts are important to give the latest financial position.  These can be produced yourself or with the help of an accountant or bookkeeper.

There is no set format for management accounts.  Most software packages will have a default layout and this can be changed as needed.  If you use an accounting system like Xero, Sage or QuickBooks and keep it up to date, you can run management accounts from there. They usually have a profit and loss account as the minimum but more experienced businesses will also include a balance sheet, cashflow, and other information.

A funder will want to see that you are on top of your finances, as you are asking them for more funds to manage. As importantly, up-to-date financial information is needed to ensure the decisions made in the business could be based on correct assumptions.

The Future: Financial Forecasts

Probably the most important set of information in any application. The best, and most asked for, financial forecast is a 3-way forecast, sometimes called an integrated financial forecast.

This comprises of a profit and loss report, a balance sheet and a cashflow and it is important that they all relate to each other – they’re looking at the same data. The credibility of this will be reviewed in an application.

A great way to create an integrated forecast is to try and use Excel, but you do have to be experienced in the movements of the financials and how they relate to each other, being comfortable with creating all the necessary formulas and checks. Another option is to use a free financial forecasting tool such as Clearview.

Clearview takes your assumptions on areas such as monthly sales, costs, and the opening position.  From these inputs, it automatically produces up to 36 months of fully integrated P&Ls, balance sheets and cashflow forecasts, complete with summaries and graphs.

Clearview was created by commercial accountants experienced in providing financial forecasting for businesses and funders.

Our partner consultancy business, Porterdale Ltd, successfully used Clearview with a client who was seeking funding for growth. Read the story here.

At ClearviewHub we offer a suite of free tools designed to make financial management easier and more effective for businesses. From basic cashflow to fully integrated 3 way financial forecasts, ClearviewHub provides everything you need to get investment-ready.

Securing investment is a critical step in growing your business. By leveraging financial forecasting tools and the resources provided by ClearviewHub, you can prepare your business for success and attract the funding you need. Remember, accurate financial management and a compelling business story are key to building investor confidence.

Ready to get started? Visit ClearviewHub and explore our tools and resources designed to help you succeed. Your business’s future starts now.