Accountant letters and financial statements: when you need them

Accountants are a business owner’s best ally — and, in a fast loan, sometimes the slowest link. Not because they’re slow, but because they’re busy, and a request that lands on their desk without warning joins the queue. Knowing when a lender is likely to need something from your accountant lets you ask early, ask precisely, and keep the 24-hour plan intact.

When are financial statements actually needed?

For many fast loans, they aren’t. Here’s a rough guide:

Loan	Financial statements?
Smaller unsecured / cash flow	Often not — bank statements do the work
Line of credit	Sometimes, depending on the limit
Property-secured, modest amount, strong equity	Often not
Property-secured, larger amount	Likely — last one or two years
Longer-term or growth funding	Likely, plus a forecast
Complex structures (groups, trusts)	Likely

Business.govt.nz lists financial records such as profit and loss statements, a cash-flow forecast and a business plan as the things to bring when approaching a bank. Fast non-bank lenders are usually lighter on paperwork for smaller amounts, but the same principles apply as amounts grow.

What are management accounts, and when do they help?

Management accounts are up-to-date reports from your accounting software — usually a profit and loss for the year so far and a current balance sheet. They help when:

• last year’s accounts aren’t finished yet;
• the business has changed a lot since the last accounts;
• the lender wants to see current trading alongside the bank statements.

They take minutes to export from Xero, MYOB or similar. Export them as PDF and name them clearly.

What should an accountant’s letter contain?

Keep it short and factual. A one-page letter on the firm’s letterhead typically covers:

1. Who the accountant is and how long they’ve acted for the business.
2. The specific facts the lender asked about, for example:
   • annual turnover or taxable income for the last year;
   • that GST, PAYE and income tax returns are filed, or when they will be;
   • any IRD arrangement in place;
   • when the current year’s accounts are expected to be finished.
3. Contact details for a quick follow-up call.

Ask the specialist exactly which facts they need, and pass that list straight to your accountant. A vague request gets a vague letter, and a vague letter gets a second request.

How do I stop my accountant becoming the bottleneck?

• Warn them on day one. “I’m applying for a business loan this week and may need a short letter.”
• Give them the exact wording or questions. Copy the lender’s request.
• Offer a deadline. “By 2pm tomorrow if possible.”
• Authorise a quick call. Let them know a lender may phone to confirm a detail.

If you have a tax agent, remember that agents manage extension-of-time arrangements for income tax — Inland Revenue notes terminal tax can be due on 7 April rather than 7 February for clients of tax agents. Your accountant will know exactly where you stand.

What if the accounts show a loss?

A loss year isn’t automatically fatal, especially for property-secured lending. Explain it: a one-off cost, a large depreciation claim, a bad debt, a slow season. If the business has since recovered, management accounts and recent bank statements can show that. Honesty upfront helps — you can talk it through on an enquiry call before deciding what to send.

Do sole traders need anything different?

Sole traders’ business income is part of their personal tax return, so the lender may ask about personal income tax rather than company accounts. A summary from myIR or a note from your accountant on recent returns often does the job.

How do these fit with the rest of the pack?

Accountant documents sit on top of the core pack — statements, ID, company details and purpose. See business loan documents for the full list, or our guide to building a 24-hour funding readiness pack before you ever need it.

How do financials help with larger, longer loans?

For bigger amounts, a lender is looking further ahead. Financial statements help answer questions that bank statements can’t:

• Is the business profitable, not just busy?
• What are the assets and liabilities, including debts that don’t show in the bank account?
• How have margins moved over the last two years?
• What does the owner take out, and is it sustainable?

If you’re applying for a larger property-secured loan or longer-term funding, having the last two years’ accounts ready — plus current management accounts — can shave a day or more off the decision. If the accounts tell a complicated story, ask your accountant to add a short covering note explaining the key points in plain language.

Illustrative example: year-end timing

Illustrative only. A Hamilton manufacturer with a 31 March balance date applies in August for $400,000 secured on its factory. Last year’s accounts aren’t finished. The accountant emails a one-page letter confirming turnover from the draft accounts and that returns are on track under the firm’s extension, and the owner attaches management accounts to July. The lender proceeds on that basis.

Not sure whether you’ll need your accountant? Ask us first.

Send a short enquiry and the specialist will tell you on the first call exactly what’s needed — often less than you think. It takes about 60 seconds, there’s no credit check when you first enquire, and your enquiry isn’t sprayed across a list of lenders. A real person calls you. Please give accurate figures so we can tell you straight away whether financials will be needed.

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