CFO Success Series: Treasury Part 2 - Debt Financing

Companies seeking capital need to plan and shop wisely. Not doing your homework or making the wrong choice may leave you empty handed, burdened with unnecessary costs or shackled with the wrong capital structure for years to come.

Earlier this month, in Treasury Part 1, we wrote about capital planning for your business. The planning process will identify how much outside capital you expect to need in the coming years. The financial position, risk profile and objectives of the company will determine if that capital is in the form of debt or equity. This week we explain debt financing options and when you should consider them. Debt financing allows you to maintain ownership and control of your business while being less expensive than equity. In many countries interest payments on debt are deductible for tax purposes. 1

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