2/6/2025
5/6/2025
Income statement and balance sheet: key documents for obtaining financing
Controlling your cash position and optimizing your financing requirements are crucial torunning your business. The income statement and balance sheet are the two fundamental documents that reflect yourfinancial analysis and enable you to effectively manage your working capital requirements. How can they help you put together a solid financing package ? How can you optimize your cash flow and manage your payments?
The complementary nature of the income statement and balance sheet
A dynamic and static vision
The income statement and balance sheet provide a comprehensive overview of your current and stable assets. This complementarity is essential for choosing the right financing for your business. The former allows you to analyze your cash flow and capital requirements, while the latter captures your balance sheet and operating debts at a precise point in time.
The operating cycle analogy
A company needs to control its operating cycle to maintain a surplus and avoid bank overdrafts. The amount of cash available depends on the management of payment deadlines, trade receivables and financial debts.
The income statement: the film of your business
Performance over time
The income statement reveals your ability to generate cash and manage your borrowings. It highlights potential cash flow problems and your ability to generate positive cash flow while managing your current account.
Impact on financing decisions
ℹ️ For an e-commerce company, the income statement provides a means of analyzing the impact of cash flow shortfalls on cash requirements. This analysis is crucial for accessing the best the best short-term financing solutions and optimize cash requirements.
Key indicators to track
The balance sheet can be used to calculate several key ratios for assessing your financial structure:
- Working capital requirements
- Shareholders' equity and available capital
- Financial debt and borrowings
- Current account and current asset management
- Time lags between collection and payment
The balance sheet: a snapshot of your financial situation
Structure and composition
The balance sheet provides a clear picture of your current assets, receivables and cash requirements. Its structure enables you to assess your ability to meet short- and medium-term financing deadlines.
ℹ️ A technology start-up was able to optimize its short-term financing thanks to effective management of its working capital and cash requirements, demonstrating its ability to generate a regular surplus despite cash shortfalls.
Key balance sheet items
Working capital requirement (WCR), which represents the time lag between cash receipts and disbursements linked to your business. Good working capital management is essential to maintaining a healthy cash flow.
Shareholders' equity, which reflects your company's financial strength and ability to absorb losses.
Net cash, which reveals your ability to meet short-term commitments. How do you plan your cash flow?
How these documents affect the chances of obtaining financing
Evaluation criteria for funders
Financiers meticulously analyze these documents to assess your company's financial health and ability to repay a loan.
A success story
ℹ️ A distribution company recently applied for financing to expand its business. Despite a slightly negative net result, its income statement showed a steady increase in sales and improved margins. Combined with a solid balance sheet and controlled WCR, this profile made it possible to obtain the necessary financing.
The Karmen solution: a modern approach to financing
At Karmen, we've launched an innovative approach to short-term financing that takes into account the operational reality of businesses. Our Karmen Loan solution offers flexible loans from €30K to €5M with terms from 1 to 24 months.
Our solutions are ideally suited to financing :
- Stock requirements
- WCR
- Marketing investments
- Operational growth
Our analysis is not limited to accounting documents alone. We take into account the dynamics of your business and your growth prospects, to offer you a financing solution tailored to your needs.
Practical tips for optimizing your financial documents
Rigorous accounting
Keep your accounts up to date and accurate. Delays or approximations can create doubts among funders.
Financial projections
Prepare realistic, well-documented forecasts. A well-constructed forecast strengthens the credibility of your financing application.
Indicator tracking
Regularly monitor your key ratios. Daily cash management is essential.
Income statements and balance sheets are more than just accounting documents. They are strategic tools which, if properly understood and presented, can open the door to financing tailored to your needs.
