Lets make 2016 the year businesses realised that they are only setting banks up for failure if they believe that their Relationship Manager has time to manage their bank relationship the way a business owner would like. Once upon a time, when bankers had manageable client portfolio sizes, you could expect your manager to be proactively anticipating your every need and getting to know your business and your industry. Today however these poor people can only manage the squeakiest of wheels.
The added frustration then comes when you have over considerable time, educated your manager about your business and they leave and you have to start again!
Its time for a rethink. These circumstances aren’t going away – if anything they will only get worse. So here are my top tips for what you can do about it:
1) Build your advocacy base
In any lending relationship with a bank there will be between 5 and 10 people in the bank who have a vested interest in your success, be it that you contribute to their P & L with the interest and fees you pay, or you contribute to their risk portfolio (ie potential loss). You need to identify who these people are and get to know them. For example, we have a client who manufactures truck accessories. They have a relationship manager, and that manager has an assistant. This has historically been the extent of their bank relationship. However as we demonstrated to them, they also need to be known by the Relationship Manager’s Boss ( the regional/business centre manager), the State Manager, The Credit Manager and the State Credit Manager, The Working Capital Specialist (The client uses a trade finance product), the Equipment Finance Manager (The business is continually buying more plant and machinery), The Merchant Services/Commercial Credit Card specialist and the Insurance Specialist.
One of the biggest issues we deal with is where a new Bank Manager takes over our client’s account and the client is not really known to the rest of the business centre. This is an alarm bell for the new manager who has a period of time on a new set to blame the last guy for poor credit decisions. If however the business centre knows you and you have advocates, the new manager doesn’t feel as exposed in supporting you and borderline credit issues get absorbed more easily.
2) No Surprises
Once you know who you need to build advocacy with, you need a strategy for getting them on side. This is most effectively done through a regular information session. Depending on your circumstances this might be monthly, quarterly, half yearly or annually, but it needs to happen before you release the financials to the bank in line with the bank requirements.
At this session you invite your 5 – 10 advocates sit around a boardroom table (perhaps over a light lunch) and you present to them everything (good and bad) that has happened to the business and industry in the last quarter and everything (good and bad) that is happening in the next quarter. This “force feeding” of information does 2 things: it shows the bank that you are in control of your business and are a worthy person to be holding their money, and it forces you to know what is going on in your business ensuring that you are a worthy person!
3) Focus on Cash
In talking to the bank at the information sessions and in between, you need to show the bank that you are as obsessed with cash flow as they are. Remember – cash flow pays back loans, not profit. Show the bank that you manage your business to maximise the cash that it produces.
4) Incorporate your Accountant
Your Accountant knows your business much better than the bank. There is a natural inference that your business is well managed if the Accountant is visible. Invite your Accountant to your Bank Information session. Everyone will benefit.
5) Buy as much as makes sense from your bank
The best way to get noticed (and loved) by your bank is to be a profitable client – one that would leave a hole in the banker’s P & L if you were to leave. So buy as much as you can. If they have an insurance policy that is cost competitive, buy it from them. If you need commercial credit cards, get them from the bank. Of course it has to make sense commercially. If you have friends who need a new bank, and your banker is reasonable, refer them in (maybe through your broker :))! Tell your debt advisor/ broker if your banker is a good one – we are always looking for good bankers to send deals to.
Only once you have done all of this are you justified in complaining about your banker being no good!
Do you have a good banker? We’d love to hear about them. Please let us know!!
Pearl Finance are a specialist Debt Advisory business that help Accountants to provide banking support to their clients. If you are not happy with your current bank relationship, contact us for an obligation free discussion about things you might be able to do to fix it, that don’t involve the hassle of moving banks.