The right communication with banks and financing partners plays a decisive role in corporate financing and planning. Structured and well-founded cash flow planning and the reporting of key financial figures are important points that banks are particularly interested in. But which reports are really relevant and how can clear planning improve the risk assessment by financing partners? Find out here how strategic and well-documented cash flow planning can add value to your company.
Reports to banks: What is necessary?
Many companies are faced with the question: Which financial reports should or can be submitted to banks? Whether for ongoing operational reporting or as part of a loan agreement, companies have various options for communicating their financial position. The following reports play a central role here:
- Forecast reports - show a cautious forecast of future Cash position and cash flows.
- Static plan - represents an initial situation and serves as a reference point to visualize plan deviations in the future.
- Deviation analysis - shows where current developments deviate from the planned course.
These reports give your bank a clear overview of your company's financial situation and planned developments. In addition, transparent and comprehensible planning strengthens the trust of banks and financing partners.
Why is a static plan important for reporting?
A static plan serves as an unchangeable basis with which you can react to changes in financial planning at any time without losing the original assumptions. Once a plan has been approved by a bank, you can fix it in COMMITLY by "committing" it. This avoids unintentional changes and creates clarity. In most cases, this plan is also the basis for the plan deviation analyses in monthly reporting to the bank.
For financing partners, it is often crucial to see that a system for cash flow planning exists and is actually actively used. The creation of fixed plans and scenarios as well as the adjustment of cash flow forecasts based on current developments show your willingness to plan ahead.
Strategic planning: The prudent businessman
Cash flow planning should always take into account the principle of a "prudent businessman" - a proven method for minimizing risk. The guiding principle: it is better to calculate conservatively than to rely on overly optimistic assumptions.
Important aspects of cash flow planning:
- RevenuesBe cautious, especially if incoming payments are uncertain.
- ExpenditureBetter to plan too early to avoid surprises.
- Time componentAlways take possible delays into account, especially for customer payments.
With this approach, companies can ensure that they can control their Cash position even in difficult phases. A transparent plan also makes it easier to identify potential liquidity problems and react to them in good time.
Scenarios and forecasts in cash flow planning
For internal purposes, the creation of scenarios for internal purposes. This is particularly helpful if you want to run through different plans or assumptions, e.g. a better case, worst case or best case scenario. In tools such as COMMITLY you have the option of creating a dynamic scenario in addition to the rolling forecast. This allows you to adjust sales or other factors and show possible effects on Cash position .
This type of planning scenario helps you to make more informed strategic decisions and flexibly adapt the forecast to market changes or operational developments.
Operational reporting and loan agreements
In day-to-day operations, you can create reports for your bank depending on your strategy and requirements. For the ongoing reporting two types of report are particularly useful:
- 12-month planShows a longer-term plan for liquidity development and cash flows based on assumptions.
- 12-month forecastRepresents the current expectation based on the latest data.
In the case of existing loan agreements, even more precise reporting is often necessary. In this case, banks and financing partners want to see how Cash position has developed compared to the situation when the loan was granted. To do this, it makes sense to create a separate static plan for the granting of the loan, fix it (commit it in COMMITLY) and use it for reporting on an ongoing basis. Deviations from the original plan can be analyzed using deviation analyses clearly documented.
Conclusion: Successful communication through clear cash flow planning
Well-documented and comprehensible cash flow planning is the foundation for successful cooperation with banks and financing partners. With a static plan, operational forecasts and clear variance analyses ensure that your bank can understand the financial situation and liquidity development of your company at all times. Transparent financial communication not only strengthens the trust of your financing partners, but also supports the risk assessment in the sense of a positive company valuation.
