All businesses include growth among their most important goals. After all, increased profits are possible only when revenues grow and expenses decrease. Increases in sales also necessitate increases in financing. Because small companies typically rely heavily on bank financing, growing businesses also present opportunities for commercial lenders.
Without proper planning, however, growth can threaten financial health and jeopardize relationships between clients and lenders. Helping small company clients manage the financial aspects of growth is one way in which commercial lenders can build relationships, reduce risk and increase both short- and long-term relationships.
In times like these, no business can afford a quarrel with their banker. During these troubling times, in fact, is the perfect time to allot some attention to your lender. Building positive relations with your banker will prove to be crucial especially when you will be requesting leniency and sympathy on their part. When you have developed such relationships, your familiarity and mutual understanding will be useful most especially in your dire hours of need.
Nobody likes surprises, especially your banker. If there are significant changes that your banker needs to know about, be ready to give him the detailed account.
Why is transparency important? With any relationship, honesty and constant communication is key. You will need him/her as your partner in what you’re doing today and what you’re expected to be doing tomorrow. Make time and build positive bank relationships like scheduling a quarterly meeting to keep each other abreast on current issues and concerns about your business, who knows maybe your banker could give you advice on matters that need immediate attention.
Its common knowledge that some entrepreneurs tend to withhold any form of negative information related to their business. That situation right there is actually the best time to talk to your banker about it so that not only is he abreast on what’s new, you are also given insight on what can be done to handle the situation better and faster.
Some entrepreneurs who have an old-fashioned view regarding banks don't want to give the bank too much information. Usually, this way of thinking will most likely result in a bad surprise because sooner or later, whether you are transparent or not, the banks will find out anyway.
From a bank’s perspective, its main interest is to see companies endure and grow. Banks do not like the idea that they are kept in the dark, because they know that companies who do succeed tend to pay back more and this is the bank’s goal - to get paid.
If you wish to build and grow your relationship with your banker, next time deliver your poor financials in person. This will give you the chance to talk to your banker on a personal level and discuss the situation further. This also adds sincerity and a personal touch to your over-all intentions.
Now that bankers are under increased inspection from auditors, if you send your financial statements on time, every month --- this gesture will go a long way to building trust between your company and the bank.
Also, make sure that you are able to comply with financial covenants such as the terms of loans that are all indicated in the fine print.
If a business has financial covenants, make sure to keep and maintain them. As not all banks will be as lenient and as understanding when the bad times come.
Bank relationships and financing services are now being offered by ASAC. With our years of experience in relationship building and growing, our vast network helps us and helps you get back on your feet and succeed
For more information on bank relationships and financing services, contact your ASAC consultant now.
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