As we slip into the fourth quarter to wind down 2017, it’s time to start planning for the year ahead. When it comes to running a successful business, there are many factors to consider, such as staffing needs, making improvements to operational procedures and addressing your company’s finances. That’s where your bank comes in.
“There’s something to be said for building a relationship with your bank,” says Adrian Pasquale, Vice President and Senior Commercial Lender at Northwest Bank. “Regular communication promotes a high level of trust and keeps your banker updated on what’s happening with your business.”
Smart Business spoke with Pasquale about how consistent communication with your bank can pave the way to enduring success for your business.
What key steps can a company take to build a stronger relationship with its bank?
Open communication is critical to establishing and maintaining a strong relationship with your bank. You should have a team of trusted advisers in place working to identify growth opportunities for your business, with your banker at the top of that list.
To maintain a strong relationship with your bank, conduct an annual financial review and share projections for the upcoming year so potential credit needs can be addressed. If you’re in growth mode — either organically or through acquisitions — quarterly meetings help make your bank aware of potential needs so it can react appropriately.
Since bankers work with a variety of companies in various industries, they have a wealth of knowledge in terms of current market activity, trends and experience in structuring credit which can provide value to business owners.
What benefits does this provide the company?
In today’s fast-paced world, business moves at high speed. As a result, financial needs can change rapidly as well as the need for equipment or short-term working capital.
By maintaining a strong relationship with your bank, both you and your bank can respond more quickly to potential financial needs. A shortage of working capital or delays in financing can impact your bottom line and result in lost opportunities. Clear communication with your bank can help you avoid that fate and get the capital you need to grow and maintain your business.
What are some things companies may not know about how banks function that could enable a stronger relationship?
Most customers aren’t aware of the strict regulatory requirements federal agencies require banks to follow, which mandate that they keep historical and current financial data for borrowers on file to determine creditworthiness.
Most loan officers also work in a team setting where analysts prepare a credit summary to obtain credit approval. Having a solid relationship with your banker would facilitate the loan approval process by maintaining updated files.
What materials or information should companies have available to make a meeting with their bank more productive?
Critical documents for bankers to review include current accounts receivable and accounts payable. These documents can help your banker determine potential credit needs.
If your company relies on federal funding as well, any information to help support continued funding is very helpful. Your banker should truly be your trusted business adviser and reinforce a solid relationship with your business. Banks can help support business growth and development, so the communication lines should be open and ongoing.
Relationships are a key to success with all businesses, no matter the industry. So maintain key relationships with your business partners and give your business a chance to achieve higher levels of success. ●
Northwest Bank is Member Federal Deposit Insurance Corp. (FDIC)
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