Managing your bank manager

Hard-working entrepreneur WLTM generous, sharing M or F banker for LTR – deep pockets & GSOH essential. Box 3428.

Is our dream bank manager really out there?  Someone who’ll always be there to support us when the going gets tough, encourage and nurture us, share our risks as well as our profits?

It’s a touching notion, but one that’s probably an anathema to many business managers as they struggle with their “virtual” banking relationship and an attitude to the sharing of risk that’s based on the philosophy of “me first”.  It’s no wonder that two thirds of us are apparently dissatisfied with our banks, especially given the stream of news stories featuring record profits, sub-prime jitters, and Northern Rock.  Merchant bankers, eh?  Is that just Cockney-rhyming slang?

Frivolity aside, our bank is a usually a key stakeholder in our business – and successful stakeholder relationships often pay dividends at the end of the day.  So what’s the secret?  How do we extract the best from the relationship?  How do we become more than just an account number to our bank manager, and what is there to gain from making the effort?

The benefits of a good relationship

1.    Save on costs

Benefit from low or even free rates for standard banking services such as monthly fees, transaction costs and overdraft charges.

2.    Borrow better

Enjoy preferential borrowing rates, gain access to loan products that may not be generally available, and the minimise corporate and personal security you may need to put up.

3.    Stay informed

Get the heads-up on new products and services that can help you save money or streamline your business processes.

4.    Be prepared

A manager that knows and understands your business is better prepared to act quickly for your benefit in times of opportunity or crisis.

All these benefits are real, tangible and translate directly to the bottom line.  In certain cases, they can make the difference between the success and failure of your business.

Fostering a productive relationship

In order to foster a positive relationship with our bank, the first thing we need is a bank manager.  If yours disappeared into the ether to join your Royal Mail account manager, if you never had one in the first place, or if your existing manager is not a business specialist – then now’s the time get a new one!  If your bank can’t provide you with a commercial relationship manager, you’re probably with the wrong bank.

It’s so important that we meet our bank manager in person, and meet him regularly – especially if we are intending to cultivate a long term and mutually beneficial relationship.  It may seem like a chore when there’s little to report, but consider it an investment in time – we never know when we’ll need him.  Get to know him (or her) a little bit: find out a bit about him and see what common ground you have on a personal level.  Not only does it strengthen the relationship, but it makes business that much more interesting when you’re dealing with “real” people!

Next, it’s down to business.  Make sure your manager understands your business – not necessarily every intricacy, but the basic principles of your industry, your sector, its cash-flow dynamics and its risks.  Provide a copy of your latest business plan and highlight any important changes.  Bring along some catalogues or other marketing collateral to bring the business to life.  Finally, and most importantly, provide enough in the way of basic financial reporting to satisfy your bank manager that your business has effective and efficient financial control arrangements in place and remains financially viable.  Ask for guidance on what your manager would like to see, and solicit general feedback on your plans and performance, and the ways in which the bank can assist you.

Banks don’t tend to like nasty surprises.  If the business is experiencing difficulties it’s important that you forewarn your bank manager in advance of any likely ramifications for your obligations to the bank, or the general health of your balance sheet.  Come clean by explaining the cause of the problem, and detail the plans that are in place for getting the business back on track.  As in all relationships, poor communication can often cause frustrations and exacerbate your difficulties.  Understand your bank manager’s situation and avoid putting him in a difficult situation.

Many of us place great value on the longevity of a business relationship, particularly in a constantly changing commercial environment that seems designed to encourage anything but.  It’s certainly possible to build a good rapport with your bank manager in a short space of time, but add in some longevity and you will establish a powerful relationship that may prove invaluable to the success of your business.

It may not last forever!

As your business evolves, don’t forget to keep on top of the relationship.  Periodically review the products and services you use, and in particular keep an eye on their terms and conditions – it’s quite possible that they will need some adapting as you grow.

It’s often the case that as circumstances change, compelling reasons may arise for changing your banking arrangements – however good your relationship may be with your bank manager.  In such situations, remember to make a proper evaluation of the whole package of products and services on offer.  Will the service justify the cost?  Will you have access to the most suitable and best value funding?  Will you have a bank manager who is able and has the time to understand your business?  Will you be providing a fair level of security on your borrowing?

Of course, it’s always possible to mix and match your banking products and services from more than one provider – but there will be a trade off in terms of your value to each provider and the lack of single point of contact.

In this age of the internet, it’s as easy to make a superficial comparison of banking products and charges as it is to, well…, as it is to scan the Lonely Hearts ads.  Make sure that someone in your financial team is shopping around for the best deals so that you have the ammunition to capitalise on the strength of your relationship with the bank manager and squeeze out the very best deals possible from your existing bank without having to up sticks and leave.

Banking comparison websites
Compare charges and offers at the British Bankers Association website:
Or the Simply Business website.

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Managing your bank manager – takeaway tips
•    Understand the benefits of a good relationship – it could make or break your business
•    Put the effort in – meet regularly, share information, get to know him
•    Keep on top – know what it costs, understand your options, use the strength of your relationship to put profit on the bottom line

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© Murray Kenneth 2009
First published in Catalogue & e-Business

Tags: Bank Stakeholders