Ask yourself this question: When is the last time you heard from your banker? Can’t remember? That’s a strong indicator you’re not getting the most out of your banking relationship.
“Good bankers are reaching out once per quarter, going over your results and determining your lending and cash management needs as your business expands,” says Scott Dodds senior vice president and chief lending officer at Consumers National Bank.
“It’s critical that bankers work to understand their clients’ current financial situation from a balance sheet and income standpoint, and their future needs for growth and expansion,” he says. “It’s not good for business owners to plan for purchases only to find out later that they’re not qualified at a time of need.”
Smart Business spoke with Dodds about the signs that it may be time to find a new bank.
What’s the first thing business owners should do if they think they’re not getting the best service from their bank?
Call your banking representative if you have not been contacted recently and request a meeting. Tell your banker that you need him or her to be your trusted adviser, following up with you about current and future lending needs and cash management products, as well as the latest in banking technology. If you haven’t heard from your banker in a while, there’s a good chance your technology may be outdated.
How willing are banks to adjust if a customer expresses dissatisfaction?
Your banker should be willing to review all products according to your current needs as well as future projects, and update any software to make sure you’re properly trained on it. If there’s a line of credit involved, your banker should see if it’s being paid down properly so you’re in the best position to get an increase when necessary.
Your banker should also recognize what portions of loans might be termed out and be willing to change the characteristics of your debt.
What are the sure signs that the current banking relationship can’t be saved?
Companies can outgrow the bank they started with if they have lending needs that would exceed the bank’s legal lending limit. Conversely, your company might be too small for the bank you’re with — the bank may have its eye on bigger regional customers.
If your bank can’t find a way to lend you more money when your business is growing, it’s time for another bank. Also, if your development officer has changed frequently, you don’t know who your officer is or your calls don’t get returned, then it’s time to leave.
How might the new bank help a business owner with the transition?
Most people stay with their bank because it can be a hassle to switch. You could be facing a new structure on loans, a change in your cash management software or process, and you may have many unusable checks from your old account.
When changing banks, work with a team from the new bank that includes a lender and cash manager. They’ll work together with you to ensure a smooth transition of checking, money market accounts and loans.
Expect the transition to take about a month to complete.
In what situations is it inadvisable or impossible to switch banks?
You may not be able to afford the prepayment penalty on your loans and therefore must maintain a relationship with your current bank. You should still be able to move your deposit and cash management accounts to the new institution until it’s an appropriate time to move your loans.
Another scenario that makes switching banks difficult would be if you’ve had a couple years of tightening cash flow in your business. Depending on your position, you may find no one else will take your loan.
A good way to determine if it’s time for a new bank is to ask yourself, ‘Who are my trusted advisers?’ Lawyers and accountants often come to mind, but if your banker isn’t also among them it’s time for a switch.
Your banker should be a trusted adviser, offering advice as you grow your company and in years of transition.
Insights Banking & Finance is brought to you by Consumers National Bank