Financial budget

In your financial budget, you determine how you will finance business assets and other investments. This can be done with equity or outside financing or a combination of both. You can make your financial budget in three steps.

Are you getting started with your financing budget? Make an  investment budget . It lists all investments in business assets. You keep this overview next to your financial budget. You now know what total amount to include in your financial budget. The financial budget is part of your financial plan.

Make your financial budget in 3 steps

1. Equity

First, calculate the amount of your equity. Equity is money that you personally contribute to your business, such as savings. Or business assets that you had already purchased, such as a company car or a computer. When applying for financing, the subordinated loans also count as equity. A subordinated loan is, for example, a loan from family or friends.

Note: are you starting a general partnership (vof) with multiple entrepreneurs? Then you add up the contributions of each partner. In a private limited company (bv), the contribution of all shareholders is equity.

2. Outside financing or debt

Determine the amount of outside financing. Outside financing is money that you borrow from business partners, such as suppliers or banks. 

You lend outside financing which makes it a debt. There is short-term debt and there is long-term debt. The boundary between long and short-term is 1 year. Examples of short-term debt are supplier credit, overdraft, and taxes payable. Long-term debt can be, for example, a long-term loan for inventory or a mortgage.

3. Solvency

Calculate your solvency. Solvency is the ratio of your equity to the total required capital. So, how much equity do you have and how much do you need in total? This indicates your company's ability to pay your debts in the long term. A financier requires that a starting entrepreneur contributes equity, usually at least 30%. In certain sectors, such as the hospitality industry, this can be as high as 50%. With a well-thought-out plan, a financier can sometimes make an exception and waive the need for contributing equity.

Example financial budget

Equity	Amounts in euros
Savings	8,000
Subordinated loan from family	7,000
Contribution own car	10,000
Short-term debt
Overdraft	5,000
Supplier credit	2,000
Long-term debt
Bank loan	15,000
TOTAL	47,000

Call in help

Do you want help preparing your financial budget? You can engage a bookkeeper or accountant via the Dutch Association of Accountants and Tax Experts  NOAB (in Dutch) or the Royal Netherlands Institute of Chartered Accountants NBA.