Advising clients on Business Finance4th July 2018
Being an accountant, you’re in the perfect position to guide your clients on how to manage their accounts, taxes and any other financial affairs. But what about business finance? With the Alternative Finance industry continuing to grow, navigating the entire UK lending landscape is becoming more and more complex for your clients. However, this is where you can help. Having an in-depth overview of their business’ finances, you can use this to identify their goals and help them decide how to progress. So if any of your clients need business finance, but are at loss as to which way to turn, here are a few pointers on what you need to consider.
What are your client’s goals?
Because of the abundance of funding opportunities available, you must ensure that you have a thorough understanding of what your clients need financially, as well as their short- and long-term goals. You must also appreciate that every business finance solution is unique, with each being suited to different situations. So you first need to identify what exactly each of your clients requires or is aiming for. Are they looking to buy or rent new equipment, support cash flow shortfalls, pay tax demands, release equity in unpaid invoices or do they need help supporting staff wages? Whatever the requirement may be, getting to know your clients and how they operate each day will help you begin narrowing down which business finance solution most suits their needs.
Are your clients looking to access capital for their business? Aren’t sure which finance solutions may be appropriate for their individual needs? Why not apply for Business Finance with Rangewell, or learn more about how your clients could benefit.
How creditworthy are they?
Next, you need to check how creditworthy each of your clients is. Before considering your client’s application, lenders want to know the likelihood of them paying off the agreement on time. One way you can determine this is by assessing your client’s income against the amount of capital that they’re hoping to borrow. Lenders will also take into account your client’s personal and business profiles, which determines their credit score. When carrying out their checks, they will look to see whether the applicant has past or recent CCJs, Accelerated Payment Notices (APNs), unpaid debts (e.g. credit card debt) and their history of resolving debt on time. If your client has a weak credit score, note that this may affect eligibility (depending on the product) and will result in them being charged more interest throughout the agreement.
You should also take into account whether your client is able to offer collateral in order to secure an agreement. Depending on the product, agreements that are said to be Secured could be established using equipment, machinery, vehicles, stock, land or property. However, although this ‘security’ helps raise lender confidence, the client’s assets are at risk if they default on the agreement. Meanwhile, Unsecured agreements don’t require the use of collateral but carry more stringent requirements and higher interest rates compared to secured agreements.
How reliable is their trading history?
You should also take into account how long your client has been trading for. Many business finance solutions may require your client to possess a trading history of no less than 2 years, allowing lenders to gain an in-depth understanding of how their business is growing and performing. This also reaffirms the client’s ability to afford and repay the agreement. However, if your client hasn’t reached this mark, there are still plenty of other finance solutions available that they may be eligible for, but such solutions might carry tighter credit limits and may not be able to provide access to larger lump sums.
What documents will they need to provide?
Finally, you should also assess what documents the lender will require from your client in order for them to apply, which often varies from product to product. However, the most common documents that your client may need to submit often include proof of identity, recent and past bank statements, cash flow forecasts, profit and loss statements, tax returns, collateral reports and invoices. As such, go through all of the documents provided by the lender and ensure that your client has them ready to go beforehand. Doing so will help make the application process smoother and prevent valuable time from being wasted, especially if your client needs to raise capital at short notice.
Are your clients looking to apply for Business Finance?
For many business owners, ensuring access to sufficient amounts of capital can prove challenging, especially at short notice. Yet, whether for purchasing new equipment, supporting late payments or replenishing supplies, capital is something no business can live without. But as an accountant, your expertise could be just what your clients need in order to overcome this obstacle. However, with so many different products and lenders to choose from, how can be sure that you’re providing the most suitable recommendations to your clients?
At Rangewell, we’re an Access to Finance specialist and have mapped over 400 lenders to offer you an overview of more than 23,000 business finance products. Our services are free to use and we’ll also guide you through the application process. We’re with you every step of the way. So if your clients looking to apply for Business Finance but need help sourcing an appropriate agreement, why not find out more with Rangewell.
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