A management accounts pack for lenders and investors is a short, consistent set of monthly or quarterly reports that shows how the business performed, where its cash is and whether it is meeting the terms it agreed. Most packs hold a profit and loss account against budget, a balance sheet, a cash flow statement, key ratios, receivables and payables ageing, and a short commentary. The pack is not a statutory document. Its value comes from being accurate, on time and prepared the same way every period.
Raffles Corporate Services works with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice. This article is general information only and is not legal advice.
How is a lender pack different from your internal management accounts?
Internal accounts help you run the business. A pack for an outside reader has to be understood without you in the room. Our guide to preparing monthly management accounts covers the reports you review internally. A pack for a lender or investor adds three things: agreed definitions, reconciliations that prove the numbers, and a clear message on risk.
| Reader | What they want to know | What to emphasise |
|---|---|---|
| Bank or lender | Can the company repay, and is it keeping to the facility terms? | Cash, debt servicing, covenant ratios, ageing of receivables, security and any breach |
| Equity investor | Is the business executing its plan and how long will the money last? | Revenue growth, margins, burn and runway, KPIs against plan, hiring and milestones |
| Shareholder lender (director or related party) | Is my loan safe and is the company being run prudently? | Related-party balances, cash forecast and use of funds |
If you have both a lender and an investor, build one core pack and add a one-page cover for each, so the numbers never differ between audiences.
What should the pack contain?
- Cover note (one page). Headline results, what changed since last period, key risks and what you are doing about them. Write it in plain words.
- Profit and loss account. The month and the year to date, against budget and the prior year, with revenue and cost lines that match the chart of accounts.
- Balance sheet. At period end, with the prior year end for comparison.
- Cash flow statement and cash forecast. Actual cash movements, then a forward view of at least the next quarter. Our article on the statement of cash flows explains the layout.
- Debt and covenant schedule. Each facility, balance, repayments due, interest, security and the covenant calculations.
- Ageing reports. Receivables and payables by age bucket, with comments on the largest overdue items.
- KPI page. Five to eight measures chosen for the business. See our list of monthly KPIs for Singapore business owners.
- Basis of preparation. One short paragraph saying the pack is unaudited management information, which accounting framework and policies are followed, and how items such as revenue recognition and accruals are treated.
Monthly or quarterly: how often should you report?
Follow what the facility agreement or investment agreement says, and do not volunteer a faster rhythm than you can sustain. A late pack alarms a lender more than a modest one.
- Monthly: usual when a bank facility has tight covenants, when the company is loss-making or when cash is limited. It requires a reliable month-end close, as described in our month-end closing checklist.
- Quarterly: common for stable companies and for investors who sit on the board and see operating detail separately.
- Annual with interim updates: occasionally agreed for small facilities, with the audited or unaudited financial statements as the main document.
Agree the due date in writing, for example a number of days after period end, and build your close calendar backwards from it.
How do you report on covenants?
A covenant is a condition in a loan or investment agreement that the company must keep to, such as a minimum cash balance, a maximum ratio of debt to earnings or a minimum interest cover. Reporting on them properly protects you.
- Copy the definition exactly. The agreement defines each ratio, for example which earnings figure is used and which debts count. Calculate it that way, not the way your accounting software labels it.
- Show the working. Put the inputs, the formula and the result in a table, with the covenant limit beside it.
- Show headroom. State how far the ratio is from the limit and what would breach it.
- Forecast the next test date. A lender prefers a warning before a breach to a surprise after it.
- Raise any breach early. Talk to the lender before you send a pack that shows one. If a facility is recalled, our article on a bank loan recall explains the position.
Where a covenant looks at the going-concern position, directors should also read our note on the directors’ going-concern assessment.
Which reconciliations make the numbers believable?
Readers rarely question a pack that ties out. Keep these reconciliations signed and dated in the file, even if you do not send them:
- Every bank and loan account agreed to the statement or lender confirmation, as set out in our bank reconciliation guide.
- Receivables and payables ledgers agreed to the balance sheet totals.
- GST and payroll control accounts agreed to the returns and payments.
- Loans, interest and related-party balances agreed to the agreements.
- Fixed assets and depreciation agreed to the asset register.
- Any difference between this pack and the previous pack, or between the pack and the later annual financial statements, explained.
Example: a trading company preparing its first lender pack
Example: this is a hypothetical illustration, not a real client. A Singapore trading company takes a bank term loan with a covenant that cash must not fall below an agreed level and that debt service cover must stay above a stated ratio. The finance executive closes the books within seven working days, reconciles the bank and loan accounts, runs the receivables ageing and prepares a ten-page pack. The cover note flags that two large customers are 60 days overdue, shows the cash covenant headroom shrinking over the next quarter and explains that collection calls are under way. The bank sees the issue early, asks one question and the relationship stays steady. Had the pack arrived late and unexplained, the same numbers would have caused concern.
What mistakes do Singapore SMEs make with these packs?
- Changing formats or definitions each month, so trends cannot be compared.
- Sending numbers that have not been reconciled, then correcting them next month.
- Reporting only profit, with no cash forecast.
- Presenting an optimistic forecast with no assumptions.
- Hiding a covenant problem in a long pack instead of putting it on page one.
- Letting the pack differ from the later annual financial statements without explanation.
- Depending on one person with no review before release.
Frequently asked questions
Does the pack have to be audited?
No. A management pack is normally unaudited. If your loan agreement requires audited financial statements, that is a separate obligation. See our guide to audit exemption for small companies for the statutory position.
Should the pack match the financial statements filed with ACRA?
The year-end pack should reconcile to the financial statements, subject to any audit adjustments. Explain any difference in the notes to avoid confusion.
What if I miss a covenant?
Read the agreement for notice and cure provisions, speak to the lender before the pack is due and get any waiver or amendment in writing.
How long should the pack be?
As short as the reader needs. For most SMEs, a cover note, the three core statements, covenant and ageing schedules and a KPI page fit in 8 to 12 pages.
Can investors use the same pack?
Usually yes, with a different cover page. Investors pay more attention to burn, runway and milestones, which our guide to investor-friendly reporting covers.
Need help preparing a lender or investor pack?
If you want a consistent monthly or quarterly pack, contact the Raffles Corporate Services team at [email protected] or on WhatsApp at +65 8501 7133. We can maintain your books, perform the reconciliations, prepare management accounts and covenant schedules from your agreements, and coordinate with your auditors and tax agent, so that the pack is ready on your reporting date.
Kevin Yeo, Raffles Corporate Services