Sydney-based financial forecast and bank reporting specialists Ongcorp Financial assists its clients prepare clear and concise reports to their banks to help them obtain cheaper finance and faster approvals.
There is so much small and medium businesses can learn and have to gain by establishing and maintaining a good relationship with their bank or financier. The businesses that recognise this enjoy the benefits that flow from that good relationship including cheaper finance and faster approvals. For businesses that don’t, it is never too late to start, and they should seek help where needed.
Management needs to recognise that banks and other financiers need to feel comfortable with the business and its key people. In order to provide this comfort, financial reporting, including cash flow forecasts and covenant compliance reports, must be high in quality and be provided on time, every time. How actual performance varies from forecast is also important. All these factors will impact on the risk assessment and ultimately pricing.
Having worked for and seen the different credit approval processes of several domestic and international banks, Tony Ong has seen first hand where SMEs go wrong and how expensive their mistakes can be. “I’ve seen a corporate client of a domestic bank pay thousands of dollars a week in additional interest because the relationship with the bank had deteriorated, in part through poor reporting and over-promising and under-delivering.” The biggest mistake is to over-promise and under-deliver because it not only directly impacts on the risk assessment and hence pricing, but also indirectly taints the business’ creditability, which can also be costly.
Two areas where many businesses report poorly are financial forecasts (cash flow forecasts) and covenant compliance reporting. This is understandable. The main reasons for this are that: –
- Management become so focused on running and growing their business that they don’t recognise the importance of their reporting obligations and the adverse implications of non compliance; and
- A business’ accounting staff (and their accountants) are not familiar with what is required because these reports may only be prepared once or twice a year. As a result it is often left in the ‘to-do list’ until the bank chases it, at which time it is often put together incorrectly in a rush and submitted late.
The services offered by Ongcorp Financial provide a means for small to medium businesses to provide professionally prepared reports to their financiers that clearly outline the projections for their business, their financing requirements, and the reasons behind them, thereby minimising the risk of miscommunication between parties and ensuring an efficient and effective credit process.
“Accountants are generally skilled at periodic tax reporting and preparing annual accounts. All our clients have their own accountants for general reporting. They choose us for financial forecasting and covenant reporting because of our expertise and knowledge of the process,” says Ong.
Management know their business back to front. They could talk for hours about the business. Ongcorp Financial specialises in translating the verbal story of what they do, where they want to go, how they plan to do it, and what they will need, into a financial story, which can easily be analysed and understood by financiers in the credit assessment process.
Ongcorp Financial benefits SMEs by helping them and their stakeholders transform a vision into numbers and understand the assumptions behind them. Engagements have included financial forecasting for a range of purposes including, bank reporting, feasibility studies, business plans, and commercial lease forecasts for landlords and their agents.
Tony Ong is the founder and managing director of Ongcorp Financial, which specialises in all forms of bank and financier reporting. For more information, visit www.ongcorp.com.au
