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Financial information clause: Copy, customize, and use instantly

Introduction

A financial information clause ensures that one party provides necessary financial information to the other, typically for purposes like securing a loan, ensuring compliance, or verifying a party's financial health. It specifies what type of financial information must be provided, how often it should be disclosed, and the methods of sharing it. This clause helps the parties maintain transparency and avoid any misunderstandings about financial status or obligations.

Below are templates for financial information clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.

Provision of financial statements

This clause ensures the provision of regular financial statements.

The [Party Name] agrees to provide [Secured Party Name] with unaudited or audited financial statements, including balance sheets, income statements, and cash flow statements, on a quarterly and annual basis. These statements will be delivered within [insert time frame] following the end of each fiscal period.

Disclosure of tax returns

This clause ensures the disclosure of tax returns.

The [Party Name] agrees to provide [Secured Party Name] with a copy of its tax returns for the past [insert number] years and any future tax returns filed during the term of this Agreement, within [insert time frame] after filing. The [Party Name] also agrees to promptly provide any additional tax-related documentation requested by [Secured Party Name].

Disclosure of bank statements

This clause ensures the disclosure of bank statements.

The [Party Name] agrees to provide [Secured Party Name] with monthly bank statements from all accounts held by [Party Name] and any subsidiaries. These statements will be provided no later than [insert time frame] after the end of each calendar month.

Provision of detailed financial projections

This clause ensures the provision of financial projections.

The [Party Name] agrees to provide [Secured Party Name] with detailed financial projections for the next [insert number] years, including expected income, expenses, capital expenditures, and cash flows. These projections will be updated and delivered annually or upon request.

Reporting of material financial events

This clause ensures reporting of material financial events.

The [Party Name] agrees to promptly notify [Secured Party Name] of any material financial events, including changes in its credit rating, bankruptcy filings, or other events that may negatively impact its financial condition. This notification will be made within [insert time frame] of the occurrence of such events.

Provision of audit reports

This clause ensures the provision of audit reports.

The [Party Name] agrees to provide [Secured Party Name] with copies of any audit reports conducted on its financial statements, including the auditor's opinion, management letter, and any corrective actions taken. These reports will be delivered within [insert time frame] after the completion of the audit.

Access to financial records and documents

This clause ensures access to financial records.

The [Party Name] agrees to grant [Secured Party Name] access to all financial records, books, and documents related to its operations, including general ledgers, accounting records, and supporting documents, upon reasonable request. This access will be provided during normal business hours.

Financial condition representations

This clause ensures representations regarding financial condition.

The [Party Name] represents and warrants that the financial information provided to [Secured Party Name] is accurate, complete, and up-to-date. The [Party Name] further represents that its financial condition is not materially adverse from what is presented in the most recent financial statements provided.

Debt disclosure

This clause ensures disclosure of outstanding debts.

The [Party Name] agrees to provide [Secured Party Name] with a list of all outstanding debts, loans, or other financial obligations, including the terms, amounts, and due dates, as of the effective date of this Agreement. The [Party Name] will update this list annually or when new debts are incurred.

Change in financial condition notification

This clause ensures notification of changes in financial condition.

The [Party Name] agrees to notify [Secured Party Name] within [insert time frame] of any material changes in its financial condition that could affect its ability to perform under this Agreement. This includes significant losses, changes in liquidity, or material adverse financial developments.

Provision of consolidated financial information

This clause ensures the provision of consolidated financial information.

The [Party Name] agrees to provide [Secured Party Name] with consolidated financial information, including group-level financial statements and performance metrics, for itself and its subsidiaries. These documents will be delivered on a quarterly and annual basis as part of the regular financial reporting process.

Financial covenant compliance reporting

This clause ensures compliance with financial covenants.

The [Party Name] agrees to provide [Secured Party Name] with quarterly and annual reports verifying compliance with any financial covenants set forth in this Agreement, including debt-to-equity ratios, liquidity ratios, and other financial metrics. The reports will include calculations, explanations, and any corrective actions taken.

This clause ensures the disclosure of related party transactions.

The [Party Name] agrees to disclose to [Secured Party Name] all related party transactions, including any transactions with affiliates, directors, officers, or shareholders. The [Party Name] will provide detailed documentation of such transactions, including terms, amounts, and nature of the relationships.

Provision of quarterly earnings reports

This clause ensures the provision of quarterly earnings reports.

The [Party Name] agrees to provide [Secured Party Name] with quarterly earnings reports, including detailed financial results, management commentary, and any other relevant information that would impact its financial performance or obligations under this Agreement.

Disclosure of off-balance-sheet arrangements

This clause ensures disclosure of off-balance-sheet arrangements.

The [Party Name] agrees to disclose to [Secured Party Name] any off-balance-sheet arrangements, including operating leases, special purpose entities, and other arrangements that may have a material impact on its financial position. Such disclosures will be made annually or upon request.

Financial reporting for business acquisitions

This clause ensures reporting of financial impact from acquisitions.

The [Party Name] agrees to provide [Secured Party Name] with detailed financial reports for any acquisitions or business combinations, including the financial statements of acquired entities, due diligence reports, and any adjustments to consolidated financial results. These reports will be provided within [insert time frame] of the acquisition closing.

Provision of financial due diligence documents

This clause ensures the provision of financial due diligence documents.

The [Party Name] agrees to provide [Secured Party Name] with access to all financial due diligence documents related to any merger, acquisition, or investment transaction involving [Party Name], including financial forecasts, valuation reports, and other relevant materials.

Reporting of cash flow statements

This clause ensures the provision of cash flow statements.

The [Party Name] agrees to provide [Secured Party Name] with monthly or quarterly cash flow statements that detail the inflows and outflows of cash within the business, including operating activities, financing activities, and investing activities.

Financial performance metrics reporting

This clause ensures reporting on financial performance metrics.

The [Party Name] agrees to provide [Secured Party Name] with detailed reports on key financial performance metrics, including profitability ratios, return on assets, and operational efficiency measures, on a quarterly or annual basis.

Reporting of significant financial events

This clause ensures the reporting of significant financial events.

The [Party Name] agrees to promptly inform [Secured Party Name] of any significant financial events, including capital raises, asset sales, debt restructurings, or other events that could materially affect its financial position or obligations under this Agreement.

Provision of updated financial forecasts

This clause ensures the provision of updated financial forecasts.

The [Party Name] agrees to provide [Secured Party Name] with updated financial forecasts, including projected revenue, expenses, and profitability, on a quarterly basis or as requested by [Secured Party Name] to ensure accurate financial planning and performance monitoring.

Disclosure of contingent liabilities

This clause ensures disclosure of contingent liabilities.

The [Party Name] agrees to disclose any contingent liabilities, including potential obligations that may arise due to legal claims, tax disputes, or other uncertain financial events, and provide detailed information on the nature and estimated amounts of such liabilities.

Provision of quarterly balance sheets

This clause ensures the provision of quarterly balance sheets.

The [Party Name] agrees to provide [Secured Party Name] with quarterly balance sheets, showing detailed asset and liability breakdowns, and any significant changes to the financial position of the business, within 30 days of the end of each fiscal quarter.

Disclosure of cash reserves

This clause ensures the disclosure of cash reserves.

The [Party Name] agrees to provide [Secured Party Name] with a detailed report of its cash reserves, including available funds, restricted accounts, and any other liquid assets that may be used to fulfill its financial obligations under this Agreement.

Reporting of off-balance-sheet liabilities

This clause ensures the reporting of off-balance-sheet liabilities.

The [Party Name] agrees to report any off-balance-sheet liabilities, including commitments, guarantees, or obligations not reflected on the balance sheet, and provide information on the potential impact of these liabilities on its overall financial health.

Disclosure of accounting methods

This clause ensures disclosure of accounting methods.

The [Party Name] agrees to disclose its accounting methods, policies, and practices, including any changes to the method of recognizing revenue, expenses, or asset valuations that could affect the financial information provided under this Agreement.

Provision of updated financial covenants

This clause ensures the provision of updated financial covenants.

The [Party Name] agrees to provide [Secured Party Name] with updated financial covenant compliance reports, including any changes in debt ratios, liquidity, or profitability targets set forth in this Agreement, on a quarterly or annual basis.

Reporting of material changes in assets

This clause ensures the reporting of material changes in assets.

The [Party Name] agrees to promptly report to [Secured Party Name] any material changes in the value or composition of its assets, including acquisitions, dispositions, or impairments that could significantly impact its financial position or obligations under this Agreement.

This clause ensures the provision of financial performance related to key metrics.

The [Party Name] agrees to provide [Secured Party Name] with detailed reports on its financial performance, specifically highlighting key metrics such as revenue growth, gross margin, and EBITDA, and explaining any significant deviations from forecasted performance.

Provision of bank loan covenants

This clause ensures the provision of bank loan covenants.

The [Party Name] agrees to provide [Secured Party Name] with a copy of any covenants, terms, or agreements related to its existing bank loans or credit facilities, including compliance certificates, reporting obligations, and any financial thresholds it must meet.

Disclosure of business interruptions

This clause ensures the disclosure of business interruptions.

The [Party Name] agrees to disclose any significant business interruptions, including disruptions to operations, supply chain, or key customer relationships, and provide an assessment of how such interruptions may affect its financial stability and obligations under this Agreement.

Reporting of financial risks

This clause ensures the reporting of financial risks.

The [Party Name] agrees to disclose and report any significant financial risks, including exposure to market fluctuations, foreign exchange rates, interest rates, or commodity prices, that could materially affect its financial position and the performance of this Agreement.

Reporting of material changes in debt structure

This clause ensures the reporting of changes in debt structure.

The [Party Name] agrees to report any material changes in its debt structure, including new debt issuances, refinancing, or any significant changes in the terms or amounts owed, and how these changes may affect its ability to meet its obligations under this Agreement.

Provision of detailed credit reports

This clause ensures the provision of detailed credit reports.

The [Party Name] agrees to provide [Secured Party Name] with detailed credit reports, including information on its credit rating, any outstanding credit obligations, and any changes in its creditworthiness that may impact its ability to meet obligations under this Agreement.

Reporting of earnings before interest and taxes (EBIT)

This clause ensures the reporting of earnings before interest and taxes.

The [Party Name] agrees to report its earnings before interest and taxes (EBIT) on a quarterly basis, providing detailed explanations of any significant changes or deviations from expected performance, and including any non-recurring items that may affect EBIT.

Disclosure of liquidity ratios

This clause ensures the disclosure of liquidity ratios.

The [Party Name] agrees to provide [Secured Party Name] with quarterly liquidity ratio reports, including the current ratio and quick ratio, to give an accurate picture of its ability to meet short-term financial obligations. These reports will include explanations for any material changes in liquidity levels.

Financial reporting for extraordinary items

This clause ensures the reporting of extraordinary financial items.

The [Party Name] agrees to disclose any extraordinary financial items or non-recurring events, including gains or losses from the sale of assets, write-offs, or any unusual transactions, that could materially impact its financial performance and obligations under this Agreement.

Reporting of material changes in equity

This clause ensures the reporting of material changes in equity.

The [Party Name] agrees to promptly report to [Secured Party Name] any material changes in its equity structure, including changes in ownership, issuance of new shares, or any other significant transactions that affect the ownership or capital structure of the business.

This clause ensures the disclosure of related party financial transactions.

The [Party Name] agrees to disclose any financial transactions with related parties, including loans, investments, or contracts entered into with affiliates, subsidiaries, directors, or officers, and provide full transparency on the terms and financial impact of such transactions.

Provision of forecasts for financial metrics

This clause ensures the provision of forecasts for financial metrics.

The [Party Name] agrees to provide [Secured Party Name] with quarterly and annual forecasts for key financial metrics, including revenue, operating expenses, gross margin, and net income, and explain any significant changes in the forecasted financial performance.

Financial audit results disclosure

This clause ensures the disclosure of financial audit results.

The [Party Name] agrees to provide [Secured Party Name] with the results of any financial audits conducted during the term of this Agreement, including the audit opinion, management letter, and any corrective actions taken as a result of the audit findings.

Reporting of legal liabilities and contingencies

This clause ensures the reporting of legal liabilities and contingencies.

The [Party Name] agrees to disclose any material legal liabilities, pending litigation, or contingencies that may affect its financial position, including lawsuits, claims, or government investigations, and provide information on the potential financial impact of these liabilities.

Provision of quarterly profit and loss statements

This clause ensures the provision of quarterly profit and loss statements.

The [Party Name] agrees to provide [Secured Party Name] with quarterly profit and loss statements, including all income, expenses, and net profit, within 30 days of the end of each fiscal quarter. These statements will provide a detailed breakdown of financial performance.

Reporting of major asset acquisitions

This clause ensures reporting of major asset acquisitions.

The [Party Name] agrees to inform [Secured Party Name] of any major asset acquisitions, including real estate, machinery, or intellectual property, within 30 days of the acquisition. The report will include the terms of the acquisition and its impact on the financial condition of [Party Name].

Disclosure of operating expenses

This clause ensures the disclosure of operating expenses.

The [Party Name] agrees to disclose its operating expenses on a quarterly basis, including but not limited to wages, rent, utilities, and other recurring operational costs. These expenses will be itemized and submitted to [Secured Party Name] within 30 days of the end of each quarter.

Financial reporting of significant capital expenditures

This clause ensures reporting of capital expenditures.

The [Party Name] agrees to report any significant capital expenditures, including purchases or investments in property, plant, or equipment, within [insert time frame]. The report will include the amount spent, purpose of the expenditure, and its expected impact on the business.

Disclosure of pension and benefit obligations

This clause ensures the disclosure of pension and benefit obligations.

The [Party Name] agrees to provide [Secured Party Name] with detailed reports on its pension and benefit obligations, including any defined benefit plans or retirement liabilities, on an annual basis. The report will include a breakdown of the liabilities and any changes from the previous year.

Provision of bank loan documentation

This clause ensures the provision of bank loan documentation.

The [Party Name] agrees to provide [Secured Party Name] with copies of any bank loan documentation, including terms, conditions, interest rates, and repayment schedules. These documents will be provided within [insert time frame] after any new loan agreement is executed.

Reporting of liquidity position and cash flow

This clause ensures reporting of liquidity and cash flow.

The [Party Name] agrees to provide [Secured Party Name] with a monthly report on its liquidity position and cash flow, including the total cash on hand, cash inflows, and outflows, along with a forecast for the upcoming quarter.

Disclosure of dividend payments

This clause ensures the disclosure of dividend payments.

The [Party Name] agrees to disclose to [Secured Party Name] any dividend payments made to shareholders, including the amount, recipient, and the timing of the payment, within [insert time frame] of the dividend declaration.

Provision of financial condition summary during negotiations

This clause ensures the provision of financial information during negotiations.

The [Party Name] agrees to provide [Secured Party Name] with a summary of its financial condition, including the most recent balance sheet, income statement, and cash flow statement, during any ongoing negotiations for future agreements or modifications to this Agreement.

Reporting of foreign currency exposures

This clause ensures reporting of foreign currency exposures.

The [Party Name] agrees to provide [Secured Party Name] with quarterly reports detailing any significant foreign currency exposures, including the nature and size of the exposure, and any hedging strategies or measures taken to mitigate risks.

This clause ensures the provision of profit-sharing calculations.

The [Party Name] agrees to provide [Secured Party Name] with detailed calculations for any profit-sharing arrangements, including the percentage of profit shared, the method of calculation, and the amounts paid, within 30 days after the close of each fiscal year.

Disclosure of contingent financial obligations

This clause ensures disclosure of contingent financial obligations.

The [Party Name] agrees to disclose any contingent financial obligations, including guarantees, warranties, or pending lawsuits, that could result in future financial liabilities. The report will include the nature of the obligations and an estimate of the potential financial impact.

Reporting of compliance with financial regulations

This clause ensures reporting of financial regulation compliance.

The [Party Name] agrees to provide [Secured Party Name] with annual confirmation of its compliance with relevant financial regulations, including reporting standards, tax laws, and industry-specific financial requirements, as applicable.

Provision of financial statement adjustments

This clause ensures the provision of adjustments to financial statements.

The [Party Name] agrees to provide [Secured Party Name] with timely notice of any adjustments made to its financial statements, including corrections to previous errors, reclassifications, or changes in accounting principles. Adjustments will be explained in detail.

Disclosure of ownership structure changes

This clause ensures disclosure of ownership structure changes.

The [Party Name] agrees to inform [Secured Party Name] of any material changes to its ownership structure, including changes in shareholders, stock ownership, or the addition of new investors, within [insert time frame] of the change.

Financial reporting for mergers or acquisitions

This clause ensures financial reporting for mergers or acquisitions.

The [Party Name] agrees to provide [Secured Party Name] with detailed financial reports in the event of a merger or acquisition, including the impact on financial performance, any restructuring, and the terms of the deal. The report will be provided within [insert time frame] following the completion of the transaction.

Disclosure of off-balance sheet arrangements

This clause ensures the disclosure of off-balance sheet arrangements.

The [Party Name] agrees to disclose any off-balance sheet arrangements, including operating leases, joint ventures, or special purpose entities, that may materially affect its financial position. The disclosure will include the nature and financial impact of each arrangement.

Provision of financial information upon request

This clause ensures provision of financial information upon request.

The [Party Name] agrees to provide [Secured Party Name] with any financial information reasonably requested to verify compliance with this Agreement, including additional statements, supporting documents, or explanations of financial metrics.

Reporting of credit ratings and financial health

This clause ensures reporting of credit ratings.

The [Party Name] agrees to provide [Secured Party Name] with updates on its credit rating and overall financial health, including any changes in its rating or material issues affecting its financial status, within [insert time frame] of such changes.

Disclosure of significant accounting changes

This clause ensures the disclosure of significant accounting changes.

The [Party Name] agrees to inform [Secured Party Name] of any significant changes to its accounting practices, including changes in revenue recognition, expense reporting, or asset valuations, within [insert time frame] after the changes are made.

Disclosure of management’s financial analysis

This clause ensures the provision of financial analysis by management.

The [Party Name] agrees to provide [Secured Party Name] with an annual financial analysis prepared by management, including a detailed review of the business’s performance, profitability trends, and any significant financial challenges or opportunities.

Reporting of changes in financial forecasts

This clause ensures the reporting of changes in financial forecasts.

The [Party Name] agrees to notify [Secured Party Name] of any material changes in its financial forecasts, including any significant revisions to revenue, expenses, or capital expenditures, and to provide an updated forecast within [insert time frame] of such changes.

Provision of annual audited financial statements

This clause ensures the provision of audited financial statements.

The [Party Name] agrees to provide [Secured Party Name] with annual audited financial statements, including the balance sheet, income statement, and cash flow statement, as well as the auditor’s opinion, within [insert time frame] of the end of each fiscal year.

Disclosure of material off-balance sheet risks

This clause ensures the disclosure of material off-balance sheet risks.

The [Party Name] agrees to disclose to [Secured Party Name] any material risks related to off-balance sheet activities, including unrecorded liabilities, guarantees, and special purpose entities, that could materially affect the financial position of the company.

Reporting of significant financial restructurings

This clause ensures the reporting of financial restructurings.

The [Party Name] agrees to report any significant financial restructurings, including debt restructurings, reorganizations, or refinancing efforts, to [Secured Party Name] within [insert time frame] of the completion of such transactions, and to provide the relevant details.

Disclosure of tax liabilities and disputes

This clause ensures the disclosure of tax-related issues.

The [Party Name] agrees to disclose any significant tax liabilities, disputes, or ongoing tax audits that may affect its financial position, and to provide updates on the status of such matters as they evolve.

Provision of quarterly earnings conference calls

This clause ensures the provision of earnings call information.

The [Party Name] agrees to provide [Secured Party Name] with access to quarterly earnings conference calls, during which management will discuss financial performance, key metrics, and any challenges faced by the business, as well as provide an opportunity for questions.

Reporting of financial contingencies or guarantees

This clause ensures the reporting of financial contingencies.

The [Party Name] agrees to report any financial contingencies or guarantees that could result in future liabilities, including contingent liabilities arising from lawsuits, regulatory fines, or indemnification clauses, and to provide estimates of potential exposures.

Disclosure of management compensation and bonuses

This clause ensures disclosure of management compensation.

The [Party Name] agrees to disclose the details of its executive management compensation and bonus structures, including base salaries, performance-based bonuses, and equity grants, as part of the financial reporting requirements.

Financial reporting of credit facility usage

This clause ensures the reporting of credit facility usage.

The [Party Name] agrees to provide [Secured Party Name] with quarterly reports detailing the usage of any credit facilities, including outstanding balances, utilization rates, and any additional borrowing under those facilities.

Reporting of fixed and variable cost breakdown

This clause ensures the reporting of cost breakdown.

The [Party Name] agrees to provide [Secured Party Name] with a breakdown of its fixed and variable costs, including a detailed analysis of operating expenses, cost drivers, and any significant changes in cost structure over the past quarter or year.

Provision of management’s financial projections for the next year

This clause ensures the provision of future financial projections.

The [Party Name] agrees to provide [Secured Party Name] with management’s financial projections for the next fiscal year, including anticipated revenue, cost estimates, profit margins, and capital expenditures.

This clause ensures the disclosure of related-party transactions.

The [Party Name] agrees to disclose any material related-party transactions, including transactions with affiliates, directors, officers, and shareholders, and to provide details on the terms, conditions, and financial impact of such transactions.

Reporting of foreign exchange exposures and hedging activities

This clause ensures the reporting of currency risks and hedging.

The [Party Name] agrees to report any foreign exchange exposures, including currency fluctuations and hedging activities, to [Secured Party Name] on a quarterly basis. The report will detail the company’s strategies to manage currency risks.

Provision of capital expenditure plans

This clause ensures the provision of capital expenditure plans.

The [Party Name] agrees to provide [Secured Party Name] with its capital expenditure plans for the next fiscal year, including budgeted amounts for purchasing property, equipment, or other long-term assets, as well as the expected impact on financial performance.

Reporting of non-recurring financial events

This clause ensures the reporting of non-recurring events.

The [Party Name] agrees to disclose any non-recurring financial events, such as extraordinary gains or losses, asset sales, or litigation settlements, and to explain the financial impact of these events on the company’s performance.

Disclosure of pension fund liabilities

This clause ensures disclosure of pension liabilities.

The [Party Name] agrees to disclose any pension fund liabilities or obligations, including actuarial valuations, funding status, and future contributions required, to ensure transparency in reporting retirement-related financial obligations.

Provision of detailed segment financial performance

This clause ensures the provision of financial performance by business segment.

The [Party Name] agrees to provide [Secured Party Name] with detailed financial performance reports by business segment, including revenue, gross profit, and operating expenses for each segment, to give a clear understanding of the company’s operations and financial health.

Reporting of changes in working capital

This clause ensures the reporting of working capital changes.

The [Party Name] agrees to report any material changes in its working capital, including significant fluctuations in inventory, receivables, and payables, and to provide explanations for any changes that could affect its liquidity position.

Disclosure of off-balance sheet arrangements and risks