Relationship banking

In these strange economic times, you need to talk to your bank as much as the bank needs to talk to you.

Instability in the banking world is what led to the economic downturn, and while things have stabilized, you still need to be aware of your bank’s status. Is it one of the banks that was mostly unaffected by the crisis, or did it have to take government money to survive?

You need to know because you don’t want to be taken by surprise.

In the old days, it was the banks asking all the questions. They wanted to know about you and your business to determine whether you were capable of paying back the money you wanted them to lend to you. Now, they are asking those questions and more about every customer, because they can’t afford any more bad loans. At the same time, you can’t afford to be left high and dry by a bank that suddenly decides to pull your line of credit because someone there decided he or she didn’t like the industry you are in. It’s important to ask as many questions about your bank as the bank asks about you.

This is where trust comes in. Both parties need information to make the relationship work. You need to be honest with the bank so it is not taken by surprise, but the bank also needs to be honest with you about what it can do for you now and in the future.

Ask yourself how much your banker really knows about your business. If he or she has never come out to see you and ask about your operations, you have to wonder how much he or she really cares about the relationship. If your banker isn’t going to try to understand your business, then how will you convince him or her to loan you money when needed? What will the bank base its decisions on if it doesn’t truly understand your company?

If your banker has invested some time in you, then you should invest some time in him or her, as well. Review the products and services you use with the bank and see if there are better options that might be available. Are you paying for services you aren’t really using? Are there ways the bank can help you improve your cash flow?

A good banker wants to be an adviser. If you aren’t getting any advice, you may need another bank.

In these economic conditions, it’s also a good idea to have a backup plan. What if your bank called tomorrow and said that it had to eliminate your line of credit? Could you survive?

Develop secondary relationships, both with other decision-makers in your current bank and with decision-makers in other banks. This way, if your current banker leaves or is downsized, there is already someone in place — either there or somewhere else — who is familiar with your business.

In today’s world, you can’t afford to be surprised by anything, let alone a sudden decision by your bank that’s driven by things outside of your control.

Work the relationship you have with your banker, but make sure you are always aware of what’s going on with your bank, just like it will be aware of what’s going on with you.