Share twitter icon facebook icon linkedin icon email icon

How to Build and Manage a Successful Relationship with Your Bank

Outsourced CFO | Outsourced CFO Services | November 15, 2013

As a business owner, one of the most important relationships you will form outside of your key management team is with your banking institution.  In order for this relationship to be truly beneficial, however, it is important that you first understand who your bank is, their mission and their strengths.  Do they have a strong commercial lending history?  How long have they been around? Do they experience a great deal of employee or management turnover?  Do they have local decision making (credit decisions)? Are they involved in charitable community development and growth?

Another important point to remember is banks are for-profit entities; and for that, they loan money (invest in assets) for a return to shareholders.  That does not make them the opponent on the field of battle, but rather businesses operating much like you do.   Banks are a principal component of the business model and have tremendous potential to become strategic business allies if relationships are properly nurtured.

Before asking a bank for a loan, a business owner should be prepared to address the following questions:

  • Why is your company borrowing money?
  • Do you, as the owner, understand the impact of additional borrowings on the company?
  •  What will be the principal source of repayment for the loan (can the cash-flow support the repayment?
  • What is the secondary source of repayment for the loan (collateral)?

TIP: A good relationship with the bank needs to form BEFORE you have a need.

We all know the importance of a good relationship in business and that is no different when dealing with your bank.  When it comes time for that new loan for expansion, working capital, real estate or acquisition, it only makes sense that your chances for approval greatly increase by already having a good rapport with the bank. Here are some helpful tips from a financial expert and former lender on how to extend the olive branch to your local bank and boost your business relationship to the next level.

Begin by choosing the right bank. Choose a bank that you can rely on for the long haul. A bank should possess qualities that reflect stability, good management and a sense of civic responsibility.  It is also important you choose a bank that suits your needs and reflects your personal traits and characteristics.

Know the entire bank management team. The easy way out is to simply work with your main point of contact, and though this relationship is of great importance, it may also be very expensive.  It is extremely important you get to know the entire relationship team, which may include your banker, his or her manager and the key credit manager.  Loans are never approved by one person and if the decision making team is familiar with you and your company, you will generally have a much more favorable outcome.

Involve the bank with your company. An easy and effective way to build and maintain a relationship with your bank is to simply keep them up-to-date and involved with your company and its activities. This may include monthly or quarterly business updates, financial or otherwise; inviting bank management to an important company seminar or outing; even a phone call to relay the company’s current activities and financial success is appropriate.  Keeping the bank in the loop ensures the long term collaborative experience you desire.  Remember, banks despise surprises in business as much as you do.  If they are treated as part of the team, they typically will react as part of the team.

Professional financial executives, such as an outsourced CFO, can aid your company in the quest to develop and maintain a stable, working relationship with a bank. The team at CFO Strategic Partners is seasoned with years of experience negotiating with banks and obtaining the best banking facilities on behalf of their clients.  We have tremendous relationships with all sizes and styles of banks, from local to regional to national and can leverage those networks for the benefit of our clients.   Having an outsourced CFO with CFO Strategic Partners as part of the client’s team gives the bank additional comfort that the company has the financial stability and sophistication to achieve the financial plan and repay the debt.

Financial experts such as CFO’s  can also provide your business with a number of financial tools, including detailed financial reports, schedules, updates, summaries and internal monitoring tools to aid in the ongoing relationship development process.

There is tremendous value to be gained from forming and maintaining a successful relationship with a bank, and it should be a top priority for every business owner. In addition, having a CFO as part of your team to manage the relationship with your banking institution(s) can help ensure the relationship is proactively maximized to your benefit.

Get on the path to long-term financial success

Contact us today