Best Practices: Banker blues

Written by ProfitGuide

A banker who understands your needs and challenges can make a big difference to your bottom line. But establishing a good relationship with him or her can be tricky. Last month PROFITguide.com asked its readers whether or not they felt their banker sufficiently understood their business. Fully 76% of respondents answered no. Nevertheless, they had these tips to offer:

  • “Meet with your banker at least twice a year just to catch up on how things are going and review your account,” advises csharp. “That way they’ll be able to put a face to the name when you have issues or need assistance.
  • “I invite my banker to spend time on my floor and in my office to get a better handle on our day-to-day challenges,” says mstilwell.
  • “Over eight years and four relationship bankers, I have realized that personality and banker friendships do not matter as much as the banker’s knowledge of the industry,” says smassie. “I have worked through debt/equity ratios, credit limits, guarantees, receivable margins and collectible ratios to find out that every banker has their own opinion as to what is reasonable. At the end of the day, the only things that truly matter are profit and industry statistics.”
  • “Maintain contact with your banker. Be proactive and let them know the plans for the company,” says Sandra. “The last thing they want is to be surprised or encountered with the unexpected results or plans. Treat them as an important supplier, take them for lunch or invite them to company celebrations.”
  • “Neither pander to them nor be condescending. Treat them like a human being as they’re just people,” says RickF. “Keep them in the loop! Like most of us in business, surprises are not usually appreciated. Be passionate, but focused and realistic when discussing your needs (wants), goals and aspirations.
  • “In order for your banker to understand your business it takes work,” says Dan Cadieux. “You must meet with them regularly to explain the nuances of your business — quarterly meetings are probably best; annually is not sufficient. Take your quarterly financial statements and show them the good and bad things that have happened and explain what you are doing to ensure the bad don’t happen again. From a banker’s perspective they want a good investment so you need to show them how their money is secure, how your business is low risk and how your business will continue to generate strong profits and cash flow allowing you to easily repay the debt. Put your sales hat on. Sell them on your business.”

For his answer Dan Cadieux will receive a copy of Managers not MBAs: A hard look at the soft practice of managing and management development, by Henry Mintzberg. Watch for another Best Practices poll in next week’s PROFIT-Xtra.

Originally appeared on PROFITguide.com