Banking tips Featured

8:00pm EDT April 25, 2010

Communication isn’t just important; it’s vital. Businesses serve themselves well when they forge a partnership with their banks in such a way that their banker’s community network opens up to them and their business. Bankers have many resources and are glad to share them with their customers.

Get the bank involved in critical decisions early and often. Today’s most effective bankers are a strategic consultant for their business customers. The bank will have an intimate knowledge of the operations of the business and can link its knowledge to the business’s resources. The banks can also help minimize expenses by providing upfront advice when a business is considering taking on an additional expense by helping answer questions.

When approving loans, lenders increasingly rely on credit history and clear demonstration that you have the ability to repay the loan. Be open and honest about past credit issues and take the necessary steps to resolve any blemishes on your personal and business credit history. One easy way to improve your credit score is to always pay your bills on time — and online bill payment services are a great solution.

Identifying and correcting any cash flow problems will help you trim expenses, save for your next big project and improve your ability to secure financing from lenders. Talk with your banker about financial services that can help improve cash flow. A thorough analysis of your business’s cash flow will help you identify opportunities for cost savings and pinpoint areas to improve operational efficiencies.

Seek to know several key bank employees. Other than the relationship manager, other key employees include the relationship manager’s manager, the administrative assistants and other branch staff. The more bank employees you personally know, the better. Bank employee turnover often presents challenges. You don’t want to be alone when your only contact leaves the bank.

Ask your relationship manager for a formal review of your bank accounts. Annual reviews of services are considered reasonable. The review should include all bank services. Ask for a treasury management specialist to be part of the annual review, or if credit is part of the relationship, ask for a risk employee to be part of the review. This is a significant part of the relationship-building process. The bank appreciates a business owner who is trying to be more efficient and profitable.

Companies with high leverage and little or no equity will continue to find credit difficult to obtain. There are certain industries that banks have a limited appetite for. Banks want to make loans to creditworthy borrowers. As part of the relationship process, ask your bank if your industry is desired.