Balance of power Featured

8:00pm EDT July 26, 2009

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.

“A good business banker should be a key financial adviser and a strategic partner for a business, someone who really understands the day-to-day operations and future company goals,” says John Miller, senior vice president, market executive for the Orange County/Long Beach market, Bank of America.

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.

“They should know more than just their relationship manager in their bank,” says Patrick Davern, senior vice president and regional manager for Orange County, California Bank & Trust. “They should have a relationship with their cash management officer. It might be appropriate to know the regional manager or even the CEO of the bank is important. And it’s also important for the bank to know more than one or two people in every company really for the relationship to be successful.”

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.

“The key is when things are not going well is to communicate and communicate early,” says Scott Connella, market president for commercial banking, Southern California, Union Bank. “When we see a management team (saying), ‘Here’s the issues that are coming up, and here’s our plan,’ that gives a lot of credibility to that management team. Not only are they identifying issues that are coming, but they also have a plan to deal with them.”

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 it’s important for the owners of the company and the bank to have an understanding as they’re looking forward, what is the bank going to be able to do to provide support, and then what support is the company going to be able to provide itself in terms of equity that’s being contributed,” Connella says about devising a strong business plan. “To me, those discussions are very important to have early on and have an understanding.

“(Secondly), there needs to be an understanding of the industry and what can the bank bring to the table, because we may have other clients or relationships that can assist that customer because of their industry expertise.”

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?

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.

“We sit down with our business clients frequently to review their current financial picture, their immediate goals and long-term goals and, as part of the process, review what products and services the client is currently using and what makes sense,” Davern says.

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.

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. If you have a responsible banker, he or she will be proactive and committed to seeing you achieve success.

“When your banker’s regarded as an integral part of the company’s extended management team, this allows them to leverage the bank’s full breadth of products and services, and most importantly, we’re able to tailor these products to the actual client and business needs,” Miller says.