CMA Ramesh Krishnan (Cost & Management Accountant) 12 April 2016
Fund raising is the challenging task for a finance person of any organisation. Business may be proprietorship, partnership, corporate or any kind of joint ventures the finance is the very basic requirement. Whether start up business or running business, in addition to the promoters funds the business required additional funds depends on the size of the business to run successfully. Funds for the business can be raised either through equity or the debt funds. Either raising funds through equity or debts for the preparation of data from the financial aspects remain same.
The investor of the equity or the financier of the debt both are expecting that whether company can service their returns properly and the amount funded will be come back safely. As finance professional, we should know about the some of the basic aspects which plays a greater role in funds raising task..
Business plan & Over view: To make understand to the investor/financier, we need to prepare brief about the business opportunities, these can be presented through SWOT analysis. This will give complete picture about the strength, weakness, opportunities, threat of the business and growth.
Projected financials: Preparation of projected financials for the future year depends on the current year is one of the basic requirement for the funds raising the base for the projected financials is the business plan and vision of the company and it should reflect also the purpose of the funds and their application. Projections also should show to investor/financier that how the company will serve their interest/returns and the source for the same.
Qualitative factors: The projected financials will show the business growth in numbers, in addition to that other qualitative factors about the business like the customer strengths, vendor relationship, human capital and quality of the employees and the good will of the company in the market and industry, these factors has to be carefully analysed and put in to the funding proposals.
Due diligence factor: All the investors/ financiers are expected the fund receiver company should be clean in the legal/tax compliance, so keeping the legal/tax compliance records in proper manner without any delays and non compliance.
Application of funds & norms: Generally all the fund providers wanted to know that how their funds are going to be used and applied, this information available in the projected financials, however the norms and use of those funds should be with good governance only by all the investor expectations. That should be clearly indicated in the fund raising stage itself.
Financial & Internal controls: Every process in the organisation need to be depends on the system, should not depends on person, the process should be controlled by the financial & internal controls this will attract any investors/lenders easily, because the financial & internal control makes the system out of any suspects and frauds.