The importance of evaluating the level of your financing need correctly

Last modified:

Tuesday 7 September 2021

It is essential to evaluate your short, medium and long-term financing needs in advance and throughout the different phases in the life of your company, including during start-up and in the development or growth phase.

Underfinancing can have numerous dangerous consequences for your company: from a "simple" delay paying bills or in making certain investments to the loss of strategic opportunities, or the suspension of payments followed by bankruptcy!

There are no miracle methods for achieving a correct evaluation of your current and future financing needs. However, the application and use of management, monitoring and planning methods and tools adapted to specific circumstances, to the environment and to the size of your company, and this on a systematic basis, should allow normal needs to be identified (except in exceptional situations).

The methods and tools currently used for this purpose are classic analytical and budgetary accounting for everything concerning the analysis of the past and present situation of your company, and the preparation of financial plans, which are based on the past (when applicable) but focused on future prospects.

In addition to evaluating the level of financing need, it is also important to assess the most suitable sources and forms of financing.

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