You’ve probably met with your executive team and members of your staff to devise ways to weather this economic cycle on sound financial footing. But you may have forgotten to invite a key player to the table: your banker.
Whether you’re seeing red or thriving during this volatile time, it’s always helpful to ask for input from an outsider. Now is the time you should be thinking beyond just the products your bank offers and see your banker in the role that he or she aspires to be your trusted adviser.
“Businesses really need more than just a bank account from their financial institutions these days,” says Liana Martino, executive vice president for commercial line of business, SunTrust Bank Tampa Bay. “They’re looking for a financial partner that’s going to help them make money and save money by giving them some business advice after they’ve had an opportunity to discuss the business and how the business operates.”
Many businesses don’t think to communicate with their bank on a regular basis, which means missing out on a valuable, free resource, according to industry experts. Think of your bank for ideas and solutions for efficiency, especially now when you’re probably looking for answers.
To take advantage of your bank’s true role as a consultant, you must start by forming and maintaining a strong relationship around trust and communication.Introduce yourself and your business
The first step in using your banker as an adviser is allowing time for him or her to get to know you and your business. Even if you’ve been partners for decades, invite your banker to your office or place of operation for a meeting.
While it’s important for the bank to learn about your operations, over time, it’s necessary for you to return the favor. A good relationship banker will introduce you to managers and key decision-makers in the bank, but if the introductions aren’t offered, take the initiative and ask for a meeting. The more people you know at the bank, the more likely your company will become a household name, the more likely you’ll know who makes the decisions and how they’re made and the more likely a smooth transition will occur if your contact leaves or is promoted.
Once the initial contacts are made, work to maintain those relationships with open and candid communication. Ask your banker how often he or she wants to hear from you. Is it once a month or once a quarter?
If issues arise in the meantime, don’t be afraid or intimidated to call your banker. One thing all bankers will tell you is that they hate surprises both good and bad. The more they understand your financials, strategic plan and any changes in the company’s overall operations, the better they’ll be able to provide products and solutions to keep you on the right track.
“There’s a saying that bad news never gets better with age,” says Mike Gilbreath, senior vice president and West Florida business banking executive, Regions Bank. “It’s always better to hear things that aren’t going well earlier. When a business has a hiccup or a little bump in the road, we have every desire to help them work through it.”Use your bank for regular counsel
Like your lawyer or accountant, use your banker as a true consultant. Whether you’re trying to stay afloat or even rapidly growing, your bank can help in navigating through this economic downturn and in planning for the future.
Once you’ve established a relationship and your banker understands your business and your industry, ask him or her to review your business plan. It’s one of the best ways to utilize your bank’s resources. And if you don’t have a plan, create one.
“It takes very little time to set this budget, but it can really save a business owner a lot of money every month,” Martino says. “According to our internal research with our clients, surprisingly most business owners don’t have or track a monthly budget. A business owner’s banker or their accountant can often assist in helping them prepare this budget.”
Your banker has a true advantage of having a national, regional and industry-specific perspective on economics.
There are a number of questions about your plan that you should be able to bounce off of your banker. Are the assumptions of your business plan reasonable for the current economic environment? How does it compare with other companies in the same industry? How can the plan be improved? What type of contingency plan should be in place? And finally, what products and solutions can the bank offer to help meet your company’s needs?
“I love all kinds of business operations questions about how they deliver their goods or services, do they have an eye toward efficiency in that, because that has an effect on your bottom line and your margin,” Gilbreath says. “There are any number of questions: product, marketing, distribution. It’s basically Business 101. Anything you would learn in Business 101 is of interest to your bank.”Take advantage of products and services
At least once a year, you should sit down with your banker to review the products you’re using. Perhaps you’re paying fees for a product you rarely use or technology has advanced and greater efficiency can be had.
A relationship review with your bank can help you tackle ways to save money and save time.
“Many businesses think in terms of, ‘I need a bank to give me a checking account or some place to deposit my money and I need a simple loan,’” says Susan L. Blackburn, Tampa Bay market president, Synovus Bank. “Those products are out there, but they need to turn to their banker to say, ‘What else can you do for me? What really is the right way for money to move in and out of my business, and how can you help me create the most efficient way to do that?’”
One of the main priorities right now is maximizing cash flow. Among popular products today are rapid deposit solutions, a desktop scanner that allows you to automatically deposit checks into your account.
While you might be thinking short term, ask your banker about options that will help you now and in the future. Interest rates have dropped perhaps you can capitalize on a new loan or refinance. Discuss with your bank how long you’ll need to borrow on a loan and how much money you’ll need to borrow to structure a plan and lock in fixed interest rates while they’re low.
But once again, banks seek to be an adviser. Some banks offer seminars and informational Web sites as additional resources to finding efficiency. And many banks, if you’ve maintained honest communication with them, will honor your need for them to be flexible.
With more than 34 years in banking, Susan L. Blackburn serves as Synovus Bank’s Tampa Bay market president. Blackburn’s primary responsibility as market president is overseeing the bank’s full-service retail and commercial banking operations and business development efforts in Pinellas, Pasco and Hillsborough counties. Before joining Synovus in 1995, Blackburn worked for Bank of America for 20 years.
Q. What role does a bank play in assisting businesses in a down economy?
In our perspective, now more than ever, the banker has to take on an advisory capacity and become that trusted partner in sitting down at the table with their customer, with regularity, and helping walk them through survival and longevity during these very challenging times.
Q. What questions should a business ask its bank to make sure its plan is financially strong?
You’d be surprised at how many businesses today don’t have a solid plan or a business plan that helps them focus on where they’re headed. The best advice I would have for a business owner is, once they put together a plan, sit down with their banker, walk them through the plan and ask for feedback to say, ‘Is this realistic based on your understanding of my financial situation, the economy, the competitive nature of the type of business I do and the amount of overhead or cost that it’s going to take to get from point A to point B.’
Q. How can a business form a strong relationship with its bank?
The business owner that is faced with both the positive or the negative needs to make certain that they’re keeping their banker apprised so that they can not only see through this economic cycle but that they can seize the opportunities that might present themselves in a positive way that the banker might be aware of. It’s a matter of keeping the lines of communication open, making certain that there is full financial disclosure from the business owner to their bank, so that the banker can adequately and fully give them the advice that they need to move forward.