Often business owners need to approach the bank for money, for example to put into their business. This is a perfectly normal part of running a business. However, there is something that many business owners are unaware of, which could jeopardise their relationship with the bank and therefore their chances of borrowing any more money in the future.
When you apply for a loan for a business, the bank may ask for a link to your Xero account (or MYBO, Banklink etc.). This is so they can check your position and make sure you meet their criteria for lending money. The problem is that unless the ledger is completely up to date and has all the entries that an accountant would do at the end of the month, then it is likely that the information you provide the bank with will be inaccurate – and in some cases, majorly inaccurate!
If you give inaccurate information, you may face a potential issue of trust between you and the bank. Relationships with banks are good if you deal honestly and provide accurate information. If you provide inaccurate information, it gives the bank a picture of how you run your business and can reduce (or eliminate) your chances of raising money in the future.
Be very wary of emailing links to MYOB, Xero etc. to banks unless your ledger is complete accurate and up to date (i.e. no end of year financial statements outstanding). Prior to giving anything to a bank, it is advisable to check with your accountant first. If you don’t, it may backfire on you in the long run.