Managing your banking relationship

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It may be said that business is all about relationships, whether with clients, suppliers, employees or indeed your bankers. Investing time and effort into these relationships pays off in increased understanding and willingness to work with you. In a way, you are depositing good will for when you may need to draw on it in challenging times.

The more your banker knows about you and your business, the better able he / she is to advise, assist and even bring you into useful networks. Relationship bankers are not automatons, they are professionals who are grounded in small business banking needs and it is in their best interests to see you succeed. Beyond the purely routine or transactional business banking, you may need to access bridge-the-gap or long term financing. A banker who understands the possible cyclical nature of your industry and your business will be more receptive to your financial needs and risk profile. If the business has borrowed and repaid loans in the past, this establishes a favourable track record.

The first few meetings with your relationship banker are the most important in setting the tone for the relationship. There is no second chance to create that first impression, so keeping your long term vision and goals in mind, put in the effort required to establish that you are serious about your business. Thereafter, the relationship will not be so time-consuming and a little more two-way.

When preparing for your first meeting, it is important to bear in mind that bankers are generally cautious and they pay attention to detail.

A good starting point is to summarize your business plan to one or two pages so that the banker can quickly understand the nature of your business. Refer to any past performance, as well as projections for growth and profitability. Be open as to experience, financing needs and any challenges. Transparency builds trust, especially if the problems are presented with a considered plan of how you intend to overcome them.

Make sure that you have all relevant legal and accounting documentation. Banks are highly regulated and FICA is only a part of that process. Check what documents are required before you arrive at the bank. This indicates preparation and planning. If you are starting a business for the first time, bring evidence of your personal credit record to show that you are responsible and not a bad payment risk.

Ensure that you ask questions about the service you can expect and what is expected of you. Consider the realities of your business – do you need easy access to a branch for making cash deposits or is electronic banking preferable? Can you negotiate flexible financing options or does your bank provide professional assistance in other areas of business? It is important to consider what your business needs may be in the long term and to be sure that the bank will be able to meet those future needs. Similarly, it pays to be realistic about your expectations, especially as a first time business owner who has little or no track record.

Once you’ve established a relationship with a banker, meet with him or her occasionally and provide updates on the progress of the business.  As your track record improves and your business needs change, your banker can adjust your service and fees accordingly.

For more information, refer to The Essential Guide for Small-Business Owners, Nedbank, pp25-26

 

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    Your banker could be an ally and a trusted advisor. Build a positive relationship to ensure a mutually rewarding business association. What service would you expect from a Relationship Banker?