Key points
Provide clear, honest, and well-organised financial reports with KPIs and commentary.
Structure your debt realistically to support growth and maintain lender confidence.
Invite your banker for a site visit to deepen their understanding of your business.
Communicate early and transparently about any financial challenges or risks.
Share your business goals and strategies proactively to build trust and collaboration.
Many businesses have a banking relationship that is purely reactive and driven by the bank. The bank can be seen as gatekeepers rather than a necessary and important financial partner in the success of a business.
But what if you could reimagine this relationship into one built on trust and proactive collaboration?
Let’s explore a different scenario, where you not only improve your business banking relationship, but there is a natural flow of information between borrower and financier. After all, your bankers are human too and have a vested interest in your business being successful!
Nothing will torpedo your relationship and credibility faster than poor financial information. Ensure your documentation is organised in a clear, easy to follow format, and always include essential items like cashflow reports. Use KPI’s and dashboards where possible and include relevant commentary to aid understanding.
Clear communication not only makes interactions with your bank go smoother, it positions you as a credible, well-organised business.
Get your debt structure right for better banking
Being realistic about the debt levels your business can support is vital for both business growth and a positive relationship with lenders. This means structuring debt in a reasonable, realistic way to save both you and your banker a lot of heartache down the track.
If you’re not sure where to start, engaging an expert business finance broker or a partner with long-term financial experience, like our
outsourced CFO, is a great way to determine the optimal debt structure.
Invite your banker to visit your business
To be able to support your properly, your banker wants – and needs – to understand your business. One of the best ways to achieve this is to host them on a site visit. Beyond simply attending the office for a meeting, take them on a guided walk around the premises, providing insights about what happens on-site each day and why. Let your banker really connect with you and your business by witnessing its people, operations and processes in action.
Communicate early about financial challenges in your business
Transparency is key to maintaining trust with your bank. If you find yourself up against a financial issue, it’s a good idea to let them know as early as possible.
I once was in a situation where a company I worked for was going to be in default of one of its banking covenants, due to a one-off event that wasn’t going to affect the overall viability of the business. Nevertheless, by alerting the bank before the breach and explaining the reason why it had occurred, the bank granted the company an exemption for that covenant in advance for the impacted reporting period. Had I not been so proactive, the covenant report with the breach would have been sent, and it would have come as a shock to our banking team.
This is not the way to develop a strong working relationship. Bankers prefer positive outcomes, but, naturally, there will be times when unforeseen circumstances arise. In most cases, these scenarios can be easily navigated, and unnecessary complications avoided, by seeking short term assistance from the bank.
Proactively share finance goals and business strategies
Getting on the front foot with communications goes a long way to building a supportive relationship with your bank.
For example, when your budget is completed and approved, invite the bank to visit and walk them through the details, including the data points that influenced your decision-making. This sets an expectation for the coming year and provides an opportunity to explain or foreshadow any changes in the business.
You can also share your strategic or business plans. Banks are legally and ethically bound to keep this information confidential, and having known these details in advance provides a great reference for them.
Further, if you have a newsletter, blog or LinkedIn page, Invite your banker to subscribe or follow, so they receive the same communications as other customers and stakeholders.
Overall, if you invest time in building credibility and trust with your bank, you may not only get better terms, but if things go awry at any stage, they are likely to be more supportive when you need them.
We’d love to know your experience of dealing with banks as a small business! Get in touch and tell us or ask how we can help. Read more on our other blogs:
