Case Study: Loan Covenants, Financial Statement Audits, and Better Banking Relationships with Signature Analytics at your side.

Business owners often sign loan documents without fully understanding the details. They see the loan amount, know they need the money, and sign on the dotted line. However, this approach can lead to serious problems later on.

 

A Real-Life Example

Recently, we worked with a new client who signed a senior loan agreement that required them to submit audited financials within 120 days of their fiscal year-end. The issue? They had never gone through an audit before. By the time they realized the amount of work involved, they were already behind. As of nine months later, they still hadn’t completed the audit, technically putting them in default of their loan covenant. Luckily, their lender was flexible, but the situation could have been avoided.

Why 120 Days Is Too Short for a First-Time Audit

The first audit for any company is a big undertaking. It requires detailed preparation, and an internal team that’s already busy with daily tasks may struggle to meet the tight deadline. For a first-time audit, 120 days is often unrealistic. Ideally, the agreement should have allowed at least 180 days.After all, the internal team has the daily, weekly and month-end close to take care of.  Adding audited financial statements to an existing workload is often more than an accounting team can handle.

How Signature Analytics Can Help

This is one of the many scenarios in which Signature Analytics can make a difference. When a business is stretched thin trying to manage daily operations and an audit simultaneously, we step in to fill the gaps. We help businesses prepare their financials for the bank, get reporting buttoned up and ensure that they can get back in good standing with their lender. Our support eases the burden on internal teams while adding value to the business’ relationship with their business banker.

Key Takeaway

Before signing any loan documents, it’s crucial for business owners to fully understand the financial reporting requirements. By working with Signature Analytics from the start, you can avoid these mistakes and build strong business banking relationships that support your business financial needs. 

About Signature Analytics 

Signature Analytics is the smart choice for business owners. With the support of our outsourced accounting and CFO Business Advisory services, your business can make smarter decisions based on accurate data.

We customize the right solution for your business to get you the Accurate, Relevant, and Timely (ART) financials you need to run your business successfully. Contact our team of experts for expert accounting and financial analysis.