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.
“The most important thing that we can do is stay close to our customers and help them through this hard recession,” says Stephen R. Callow, senior vice president and business banking regional manager, Southwest Bank of St. Louis. “And the more we know about our customers’ businesses, the more we can be value-added, helping through this difficult time.”
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. It will better help the bank provide you valuable products and solutions.
“What we do as relationship bankers is we go out and we meet customers and prospects, and we get to understand their business,” Callow says. “We don’t lead with product, we don’t push product, we try to understand and figure out what their needs are before we ever even talk product.”
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.
“It’s not unusual when a company is maybe struggling in a down economy for the communication not to be as good as it probably should be with a bank, but I would tell you that almost all bankers are going to work better with a company if there’s a lot of communication, if the financial information is plentiful, and that the discussion is candid about where that company thinks it’s going,” says Jack Schreiber, president and COO of the St. Louis region, Commerce Bank.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.
“Allow your banker to sit in on your planning strategy sessions,” says Michael Scully, St. Louis regional president commercial banking, U.S. Bank. “Ask for input. Always consider that a well-qualified banker benefits from exposure to many different successful business relationships and has no doubt identified strategic best practices.”
Your banker has a true advantage of having a national, regional and industry-specific perspective on economics.
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?
“One of the most important things is to test the assumptions that are the underpinning of a business model,” Callow says. “They need to be tested and compared to other businesses in the industry to make sure that those underlying assumptions are valid and will stand the test of time because then that makes that business model or business plan a viable business plan.”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.
“Banks have hundreds of products and services,” Scully says. “Clients should expect and deserve to be exposed to only those products (that) can earn them a positive return, reduce overhead, minimize fraud and generate adequate returns on their liquidity.”
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.
“It’s relationship banking, and it works both ways,” Callow says. “If a business is struggling, the best thing that we can do is sit down and talk things through, find out where they’re at and where they’re going and what we can help them do to get there.”