Technology has made many aspects of life easier, including banking. When you’re a business leader with numerous daily responsibilities, the extra time you gain from not having to make a trip to the bank can be quite valuable. Care must be taken, however, to ensure that the relationships you’ve built with the people at the bank are preserved, says Rick Hull, Executive Vice President/Regional President at Home Savings Bank.
“It becomes very easy for people to hide behind texts and emails and avoid personal contact,” Hull says. “They may believe that they are doing others a favor by not engaging in a conversation by phone or in person. But those live interactions help strengthen relationships. In the banking world, companies need to be in regular contact with their bank to ensure they are on the right path to maximize the growth potential of the business.”
Smart Business spoke with Hull about some keys to establishing a better working relationship with your bank.
How often should company representatives meet with their bank?
The frequency of communication is different in every circumstance. There are companies that prefer to meet with their bank on a quarterly basis. They value the routine of sitting down every three months to review financial statements and get an update on where the business is at from an economic perspective. Other companies would rather meet annually to recap the past year and make plans for the year ahead.
Banks will almost always defer to the desires of the client. In some cases, the company has no need for audits as it has built a system that has proven to work quite well. But these same businesses will still take the time to review their statements each year and set up a formal meeting simply to ensure that they haven’t missed anything. Banks appreciate clients that are proactive and take the initiative to maintain a regular dialogue to discuss their fiscal status.
What do companies tend to miss when conducting their own fiscal review?
When bankers review a company’s financial statements, they look for trends. What’s the status of that company’s receivables and have there been any changes worth noting? Does the company have more invoices than usual that have stretched to 45 or 60 days without being paid? Left unchecked, these trends can lead to bigger problems that hamper the company’s growth.
On the payables side, banks can help clients identify opportunities to dictate better terms with vendors. They may not realize that they can earn a discount by paying an expense within 10 days. Bankers are continuously looking for options that allow their clients to function more efficiently.
How should a company raise concerns it may have with its bank?
Bad news does not typically get better with time. If a company has an issue or a concern either with something that has happened internally or with the bank itself, it’s always better to have that conversation early and openly address the problem. If it’s a financial problem such as the loss of a key client or an industry challenge, the sooner the bank can get to work on finding a solution, the better off the client is going to be. Banks can take steps to help address problems with cash flow or monthly payments such as deferring a payment or making it interest only for a period of time. If the company delays communication and the problem gets worse, the path to a solution can become significantly more difficult.
What is the benefit of working with more than one bank?
Even companies that have built a strong working relationship with one bank should consider taking some of their business to a second bank. It could be a small equipment loan or an arrangement to lease cars. It’s much easier to initiate a relationship with a bank when you don’t need to do it. It serves as a protection against unexpected changes that could happen at any time. A bank may find itself in a position where it has to make changes that affect your business, through no fault of your own. If you don’t have a backup plan or a relationship that has already been formed, it could make the transition more challenging.
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