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.

“Our objective is to become a trusted adviser to our clients, and our clients need a trusted adviser more than ever during these vulnerable economic periods,” says Daniel K. Fitzpatrick, president and CEO for Citizens Bank, Eastern Pennsylvania, New Jersey and Delaware. “What does a trusted adviser do? They provide information. We have a tremendous amount of economic research that we do continuously.

“Then, of course, it’s about staying very close to your client, and communication is the key. The more we can understand our client’s business the better we can provide good advice and counsel to them.”

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.

“The banker gets to see what the operations are like, he gets to see the efficiencies and the sophistication of that borrower or that customer, and he can also make recommendations and help,” says Ron Matthew, Greater Philadelphia market president, TD Bank. “But more importantly, it’s really getting to know that customer by seeing him in his business operations, in his business home, and that’s probably the best way that a strong relationship can be truly formed.”

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.

“I think that you want to have good senior management dialogue, because it’s good for the relationship, it’s good for the banks ability to deliver its full product set to a client as well as for the bank to be as strategic as possible,” Fitzpatrick says.

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.

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.

“They should go to their bank and present their business plan and ask for (the bank’s) assistance and guidance,” Matthew says. “The bank or their banker sees numerous customers in the same or similar industry, so they have much more exposure than that one customer does. Maybe that customer has experience in his own business line, but the bank has seen, again, numerous customers like that. We have peer group analysis that we can compare his numbers or his projections or assumptions to reality — what the bank has seen over the years, currently or in the past.”

Your banker has a true advantage of having a national, regional and industry-specific perspective on economics.

“I think most clients view running their business plan by their banker as a help to them, so we do want to challenge some of those assumptions.” Fitzpatrick says. “And not just challenge in the negative way, but really (try) to provide additional information.”

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.

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. And many banks, if you’ve maintained honest communication with them, will honor your need for them to be flexible.

“Probably the key resounding factor that keeps coming up in this down economy that we’re all experiencing is being flexible,” Matthew says. “The bank needs to recognize that and also realize that these customers, our customers, who were here in the good times, will continue to be here in the bad times but just may need a little more flexibility than they had in the past.”