If your budget is based on strong growth, a leap into new markets or substantial investments in technology, machinery, property or personnel, there is a good chance that last year's financing will no longer be optimal. Consider higher inventories to meet rising demand, new machinery that needs to be purchased, or an expansion of the workforce, with salary costs rising faster than the additional revenue coming in. All these developments put direct pressure on working capital and affect solvency. What was a solid financing mix last year can suddenly become a brake on growth or even cause liquidity tensions later in the year.
Fines? No, thank you!
Before you finalise the budget, it is wise to ask yourself a number of crucial questions. First of all: is the margin still secure? Many bank loans contain covenants, such as solvency requirements or maximum debt position in relation to operating profit. If your budget shows that profits or working capital are lower than expected, or if investments are higher, you run the risk of breaching these covenants. This can lead to penalties or even termination of the loan. In addition, if the margin is smaller, the bank may decide to increase the credit costs. A breach of bank agreements remains a formal ground for termination, which you obviously want to avoid.
Robust balance
It is also important to check whether your working capital is still sufficient. Higher turnover usually means that more money is tied up in accounts receivable and inventories, which increases the pressure on liquidity. Additional working capital financing may be required, ranging from factoring to an increase in your credit limit. And if the debt ratio becomes too high as a result of the plans for 2026, it may be time to strengthen your equity, for example through personal contributions, new investors or hybrid forms of financing that make the balance sheet more robust.
Is the mix suitable?
The budget for 2026 serves as a blueprint for the future of your business. That is precisely why it is essential that the financing structure aligns seamlessly with it. This month, take the time to thoroughly examine not only your turnover and costs, but also your balance sheet and capital requirements. By proactively steering towards a suitable financing mix now, you can ensure that 2026 will not only be a year of growth, but also a year of financial peace of mind and stability.
Would you like assistance in identifying your financing needs or exploring alternative sources of financing? Xolv is happy to help you.