Approved is not the same as funded

There is a moment in a financing process when optimism can get ahead of the documents. An encouraging meeting becomes “the lender is on board”. A discussion of terms becomes “the money is agreed”. An approval becomes a date on the company’s spending calendar.

Those statements can describe very different levels of certainty.

IFC’s published project cycle distinguishes review, negotiation, approval, commitment and disbursement. Other institutions have their own processes, but the broader lesson is useful: progress needs to be described by the stage actually reached.

Ask what remains outstanding

A business planning expenditure should understand which approvals are still needed, which documents remain unsigned and which conditions must be satisfied before funds can move. Responsibility for each item should be clear.

Some conditions may depend on the borrower. Others may require third parties, regulatory action or completion of another commercial step. Treating every open item as routine can produce an unrealistic timetable.

This matters beyond internal planning. A supplier asked to mobilise, or an intermediary communicating with a client, needs an accurate account of the financing status.

Make the language match the evidence

A useful update can say that indicative terms have been received, diligence is underway or signed documentation remains subject to specified conditions. Precision protects credibility when the process takes longer than expected.

B&A’s position is that financing communication should help people make sound decisions, rather than maintain excitement. Ask for an evidence-based completion plan and update it as items close.

The milestone that changes available cash is disbursement. Every earlier milestone can be valuable, provided it is understood on its own terms.