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.
“What we should be for that business customer is a part business consultant, part business partner, but we should be there to provide sound advice as to how to get through a tough economy,” says John Pelizzari, president and CEO, Fifth Third Bank, Central Indiana. “We don’t know the business as well as the owner, of course, but we do see a large sampling of businesses throughout our footprints wherever we operate, and we may have unique knowledge of the local economy that may be helpful to that business owner.”
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.
An important element of building a strong relationship is educating your banker on your business and your industry. That may be through multiple conversations or even swapping articles relative to the company and industry, says Randy Reichmann, president of the Indianapolis region for Old National Bank.
“The other thing, and it’s the most important thing, you’ve got to get people out to your place of business,” Reichmann says. “You’ve got to let them see what it is you do and how you do it and the challenges you face.”
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.
“Nobody likes surprises, so being able to consistently let the bank know what’s going on with your company, what you expect to happen and having those very open, candid conversations is by far the best way [to maintain a relationship], ” says Gary Hentschel, president, KeyBank Central Indiana District.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.
Your banker has a true advantage of having a national, regional and industry-specific perspective on economics.
“I think the thing that the bank might have that maybe (businesses) don’t have is the experience of working with a wide variety of companies,” Reichmann says. “And so if (the) company is coming to the bank and they’re saying, ‘Hey, we’re trying. We want to obviously be successful in this difficult economy,’ what can we do is the question they’re asking us.”
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?
The conversation with your banker should end with clear and feasible outcomes.
“Both should be looking at each other saying, ‘Here’s our current situation; here’s where we want to get to in the future. How do I get there?’” Pelizzari says. “It’s going to be a melting of ideas between the bank and the business owner.”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.
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. Another concern to hedge against is fraud.
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.
“Its incumbent for the bank to understand their clients’ business,” Hentschel says. “It’s incumbent upon the business to try to communicate everything that is going on, as well. If you have that type of open conversation and discussion with your bank, that’s going to yield opportunities for the bank to provide resources [and] some options and advise them on some things that could be positive for them as they work through a down economy.”