SME Bankability: Financial Information for Banks and Lenders
A company’s bankability depends not only on historical results, but also on its ability to present its financial position, funding requirements and future prospects clearly and consistently. CMO&A assists SMEs in preparing financial information for banks and other lenders, combining financial statements, up-to-date management data and forward-looking forecasts.
The EBA Guidelines on loan origination and monitoring emphasise the assessment of creditworthiness and the borrower’s ability to generate sufficient cash flows to service debt. For SMEs, this makes it increasingly important to supplement historical financial statements with current and forward-looking information that is consistent with the company’s business plans. (eba.europa.eu)
What information is useful when dealing with banks ?
We assist companies in preparing and organising:
- interim financial and balance-sheet information;
- profit-and-loss, balance-sheet and cash-flow budgets;
- business plans and financial plans;
- cash-flow forecasts;
- analysis of financial structure and debt sustainability;
- key financial and operating indicators;
- periodic reporting for banks and other lenders;
- documentation supporting new financing requests, renewal of credit facilities and investment programmes;
- non-financial and sustainability information where relevant to the relationship with financial institutions.
The objective is to provide information that is consistent, understandable and verifiable, reducing the need for lenders to rely solely on the latest available annual financial statements.
Bankability, Central Credit Register and financial planning
Bankability should not be assessed separately from the company’s overall financial structure. Financial information should be considered together with the use of credit facilities, cash-generation capacity and the prospective sustainability of debt.
For this reason, our work may be integrated with Bank of Italy Central Credit Register analysis, allowing the information prepared by the company to be compared with the way its credit relationships are represented within the banking system.
The regular preparation of budgets, financial forecasts and management reports is also useful not only in relationships with banks, but as part of business planning and management control.
Reducing information asymmetry
Good financial reporting does not guarantee that financing will be granted or that specific lending terms will be obtained. It does, however, enable the company to reduce information asymmetry and engage with banks and other lenders using more complete, timely and forward-looking data.
We tailor the level of analysis and reporting to the characteristics of the company, avoiding unnecessary complexity and focusing on information that is useful both to management and to lenders.
If you would like to improve the quality of the financial information provided to banks or prepare documentation for a financing request or renewal of credit facilities, you can arrange an initial meeting with CMO&A by emailing consulenze@studiassociato.it
