Typically when businesses think of their bank, they think only about loans and access to credit. But there is much more your bank can be doing for you, says Emily Ruvalcaba, executive vice president, division manager for corporate banking, at Bridge Bank.
“Of equal importance is working with your bank to focus on the cash management side of your business,” says Ruvalcaba. “Do you have the right deposit accounts, and are your cash balances working for you to the best extent that they can? Are payments being made and receivables being collected through electronic means? If your business transacts internationally, are you able to negotiate in multiple foreign currencies? Businesses need a banking partner that will advise them on the right products that will help to improve cash-flow and their bottom line.”
Smart Business spoke with Ruvalcaba about how to find the right banking partner and how to make the most of that relationship.
If a business is looking for a new banking partner, where should it start?
Look to your trusted advisers, such as your attorney, insurance agent or CPA, to refer you to a bank with the expertise that your business requires. Professionals such as CPAs have relationships with many banks, and they’re likely to refer you to those that can provide your business with the best service possible. When you share common professional relationships with your bank, you become part of a business community that is focused on referring only the best service providers.
Plus, someone such as your CPA knows your business, and will be familiar with your company’s banking needs. That person knows the products and services you have with your existing bank and is in a position to refer you to the business bank — and the banker — that can better meet your needs.
Finally, don’t choose a bank just because it may be located near your office. In today’s virtual world, you can do your banking from anywhere: make deposits from your office using remote deposit capture, transfer funds, make payments, send wires, approve payroll — all can be done using online banking. Choosing the right bank and the right banker is too important a decision to be based solely on physical proximity.
Once a bank has been identified as a potential partner, what questions should a business owner ask to make sure it’s the right choice?
Ask how well that bank and its bankers get to know clients. Do they visit their clients to understand how their business operates? The business owner should also ask if the bank has experience working with similar types of companies. Ask who will be handling your account on a day-to-day basis. Will you have a banker or a team of bankers that is going to be consistent, or are you going to be calling an unfamiliar representative through an 800 number?
Ask how often they expect to meet with you, because a bank that gets to know its clients is going to be able to provide a higher level of service. More important, if challenges arise within the company, the bank is less likely to overreact and it will be more willing to work with you, but that can only happen if a solid relationship has been built. For example, if a company that has borrowed from the bank is growing rapidly and its leverage increases to a level higher than was set through the loan covenants, the bank will be in a better position to show flexibility and a willingness to work through such issues.
By building a strong relationship and understanding your company’s operations, your banker will be better equipped to find ways to accommodate unforeseen circumstances.
Should business owners share the potential for bad times with their banker?
Absolutely. For example, if you know that your business is going to have a challenging quarter and may have trouble meeting loan covenants, it’s a great idea to pick up the phone and talk to your banker.
Bankers don’t like to be surprised with negative news. You’re going to have to deal with the issue eventually, and the more proactive you can be, the better that relationship will be and the more that bank is going to work to be your advocate.
How can your banker help your business in other ways?
Sometimes business owners are so focused on growing their business that they don’t realize the full extent of banking products that their bank can offer. Sit down with your banker and say, ‘This is how I run my business; are there any other banking services that my company can benefit from?’
It’s also a good idea to bring in your banker when you’re doing tax planning with your CPA at year-end, especially if the company is projecting growth. As you’re planning for the next period, your CPA and banker can work together to ensure that adequate financing will be available to support your goals.
Emily Ruvalcaba is executive vice president, division manager for corporate banking, at Bridge Bank. Reach her at (408) 556-8327 or Emily.Ruvalcaba@bridgebank.com.