How should I explain a renovation company’s work in progress to a lender?
Give the lender a job-by-job schedule showing the contract amount, what has been billed, what has been collected, costs spent and costs still to come. Explain the stage of each job and any disputes. A tidy schedule shows you know where the money is.
Lenders see unfinished renovation work as both an asset and a risk. Build a schedule with one row per active job. For each, list the customer, the contract amount, the percentage complete in plain terms, amounts invoiced, amounts paid and what you expect to spend to finish. Keep the method consistent from month to month.
Explain the odd ones. A job that is far ahead of its billing means you have funded the customer, and a job billed far ahead of its work means you hold their money. Both affect cash. Mention any holdbacks, change orders awaiting approval, warranty work and customers who are slow to pay, and say how you plan to collect.
Offer context for the whole book of work. Show how the schedule compares with last year’s, how many jobs usually finish on budget and how you handle a loss on a job when you spot one. Your accountant can help you present the figures consistently with the financial statements, and a lender will tell you what format it prefers. Update the schedule before each lender meeting so nothing in it is out of date by the time it is read.
Key takeaways
- Prepare a job-by-job schedule with billed, collected and cost-to-finish columns.
- Flag jobs billed ahead of or behind the work done.
- Mention holdbacks, disputes and slow payers before the lender asks.
- Refresh the schedule before every lender meeting.
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentWhat are financial statements?
- 02Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 03Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
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