The bank is not your enemy
There has been so much negative press about banks lately, and yes I know that the people at the top have made some very big mistakes, but I still don’t get this whole the bank is the bad guy thing that seems to be going on. It is being discussed on Twitter, on business forums, and even when I was at a networking lunch today I felt sorry for an RBS business development manager who found herself trying to defend herself at one point. So I thought I’d put together a guide on how you should work with your bank, because I do and I’m pleased to say I’ve never had an problems with my bank.
Keep you Bank Close
Firstly and most importantly, if you walked up to a person on the street you had never met and asked them for a £50,000 loan what do you think they would say? The chances are they would laugh, tell you get to a life, and walk away, so why would you expect anything different?
If you do not keep your bank in the loop with what you are doing with your business how on earth could you ever expect them to make any personal decisions about your business? Meet your relationship on a regular basis and just fill them in with what you are doing, the plans for the future, and what is working and what isn’t working. If you have any bad paying customers let them know, I’m talking warts and all. That way they get to know you and your business. You become more than just a number.
Keep them up to date with your finances.
Do you send your relationship manager your monthly management accounts? If not, you should. If you don’t have monthly management accounts then you have bigger problems anyway. Add your bank relationship manager to the email distribution list for your management accounts at the same time they come to you, not doctored versions made to look better or worse, exactly as they come. Also include your aged creditors and debtors, give the bank the full picture.
Believe me when I say, if they know exactly how your finances work and can even see you run a well managed financial system in your company it gives the bank more confidence in your business, it helps them apply the personal touch to decisions about lending or other facilities. If they know nothing about then it becomes a computers decision solely.
Put your money where your mouth is!
So many people expect the banks to freely lend them tens or hundreds of thousands of pounds for their business but are not prepared to commit anything themselves. They are not prepared to put up any security on their house, or any savings or finance of their own in. I’m not a bank but what this says to me is “I’m not that confident in my business so am not prepared to risk my own money, but I’d happily blow your money”. If I was a bank and someone was asking me for money but not put any of their own up alarm bells would be ringing loud and clear. If you don’t believe in your own business then walk away, but if you do believe in your own business then you should be prepared to risk as much as the bank.
Ask their opinion and feedback
You have a good relationship with your relationship manager from the bank because you meet them on a regular basis, and they fully understand your business. They know your financial situation because you copy them in on your monthly management accounts. So now ask them for their thoughts on how the bank can help you with your business, do they have any other clients you could do business with that they could introduce you to? Do they have any other products that could help your business (finance, factoring, more)? Do they have any thought about your business that perhaps from the outside they see and you don’t?
If you don’t have a relationship manager with your bank, get one, if your bank doesn’t provide them then the chances are you will be a number. If you don’t ever need more than a basic current account from your business bank this will be fine. However, if you ever need any borrowing or other more complex facilities then it is important to establish a good relationship with your bank.
I work by these basic rules with my bank and have to say I’ve been extremely happy with them over the past 10+ years I’ve had a business account. I’ve had quick and easy decisions on overdraft facilities, mortgages and other bank facilities. If I didn’t talk to my relationship manager it would not have been that simple, he knowswhen things are good and I’ve also sat with him and talked through when times have been hard, where I have made him aware of what my plans to handle the bad times were. My bank has supported me through all these.
I’m happy to give testiment that my bank is The Royal Bank of Scotland, the bank that has received such bad press lately. The same bank that got the bad publicity for the leaked memo about splitting their good and bad customers into differing categories. Well excuse me, isn’t that what all good businesses are meant to do, not that this was actually what was really happening mind, I’m not going to go into detail here but it was a paper/balance shuffling excercise.
The bank is not your enemy, it can be one of your biggest assetts, but you have to communicate with them. If you don’t then don’t be surprised if you become nothing more than a number processed by a computer.