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Corporate Finance

Preparing accounts before a funding conversation: what lenders and investors actually look at

Most funding conversations stall not because the business is unsuitable, but because the numbers are not ready when the conversation starts.

April 2026 | Estimated read time: 7 min

The businesses that move quickly through due diligence are rarely the ones with the best performance. They are the ones whose financial information is organised, current and easy to interrogate. Preparation before the meeting determines the pace of everything that follows.

What a lender reads first: the core pack

The starting point for most commercial lenders and equity investors is a core pack of financial information. For owner managed businesses, this typically means:

  • Statutory accounts for the last two completed financial years.
  • Management accounts for the current year to date, no older than 60 to 90 days.
  • Three to six months of business bank statements.
  • A summary of existing borrowing facilities and their terms.
  • A clear statement of how much is needed, what it will be used for and how it will be repaid.

What catches businesses out is not knowing in advance that all of this will be needed at the same time, or discovering that management accounts have not been produced monthly and now need to be reconstructed from bookkeeping records.

Why statutory accounts are not enough on their own

Filed accounts answer the compliance question. They do not answer the commercial one. A set of accounts prepared for Companies House and HMRC is designed to meet statutory requirements. It does not explain margin movement, the condition of the debtor book, the working capital cycle or the relationship between cash and reported profit.

Management accounts fill that gap. Lenders and investors need to see that the business is well run, financially disciplined and in control of its numbers.

A business that has not been producing management accounts monthly will spend weeks on a retrospective exercise. The results are usually less credible than accounts produced routinely throughout the year.

Building a credible forecast

A forecast matters because it tells the funder what the money is expected to do. A projection that simply moves recent revenue upward without explanation does not answer the question a lender will ask: how confident are you, and what supports this?

Sales assumptions

Evidence behind growth

Named pipeline, signed contracts, a demonstrable run rate or documented market comparables. Growth without evidence is not an assumption a lender can underwrite.

Cost assumptions

The real cost base

The staffing plan, supplier agreements, new finance cost of the requested facility and the tax liability that improved trading will generate.

Cash timing

The missing question

A profit and loss forecast without a cash flow statement leaves the most important question unanswered. Profitable businesses can run out of cash when VAT, Corporation Tax and debtor collections are not modelled on the correct timing.

Questions that arise in every due diligence

Every lender working through a set of accounts will form a list of questions. Businesses that identify those questions in advance and prepare clear answers move through the process faster.

Margin movementIf gross or net margins have shifted, the funder will ask why. An unprepared answer implies the directors do not track their own margins closely enough.
Customer concentrationWhere a significant proportion of revenue comes from a small number of customers, lenders will ask about contracts, renewal risk and what happens if a key customer reduces spend.
Overdue debtsAn aged debtor report showing invoices 90 or 120 days past due needs explanation. The lender needs to know whether the debtor book is real and collectable.
Director loansDirector loan accounts, inter company transactions and related party balances are scrutinised closely and should be documented before the meeting.
Tax arrearsOutstanding PAYE, VAT or Corporation Tax indicates HMRC has an existing claim on the business. Time to Pay arrangements need to be disclosed and documented early.

What a complete funding pack contains

A funding pack is not the same as sending last year's filed accounts. It is a purposeful document designed to answer the questions a lender will ask before committing to a process.

01

Statutory accounts

Two years of statutory accounts with commentary on significant movements.

02

Management accounts

Current year figures with a short variance note and current trading commentary.

03

Working capital

Aged debtor and aged creditor reports that explain what is collectible and what falls due.

04

Bank statements

Three to six months of business bank statements to evidence cash movement.

05

Cash forecast

A 12 month forecast with named assumptions, repayment costs and tax timing.

06

Funding proposal

The amount requested, purpose, proposed term and expected repayment route.

For businesses approaching equity investors or seeking growth finance, the pack is usually more detailed and may include KPI history, unit economics and a three to five year financial model.

Funding support

Prepare before the first conversation

Our Corporate Finance team prepares funding packs, forecast models and management information for owner managed businesses approaching lenders or investors. Where the pack depends on current reporting, our Bookkeeping and Management Accounts service can help bring the numbers into a reliable monthly format.

Related support

Corporate Finance

We can prepare funding packs, forecast models and management information for lender or investor conversations.

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FAQ

Frequently asked questions

What accounts do I need before approaching a business lender?Most lenders want at least two years of statutory accounts, current year management accounts no older than 60 to 90 days, three to six months of business bank statements and a cash flow forecast.
What do investors look for in management accounts?Investors look for a monthly profit and loss, balance sheet, cash movement summary and evidence of how the business tracks performance against budget. Commentary explaining unusual movements is as important as the numbers themselves.
Will a director loan account affect my funding application?A director loan account in debit will be scrutinised but does not automatically prevent funding. It needs to be explained clearly and the terms documented before the lender asks.
Can I approach a lender if I have a Time to Pay arrangement with HMRC?Yes, but the arrangement needs to be disclosed and documented. Lenders will want to understand the amount, repayment schedule and whether payments are current.
How detailed should a cash flow forecast be for a lender?A lender ready cash flow forecast should cover at least 12 months, show receipts and payments on realistic timing, include the cost of the facility being requested and be supported by named assumptions.

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