How to Optimize Your Banking Relationship

“Tell me about your banking relationship.” It’s one of the first questions I ask when working with companies to build a solid financial infrastructure for growth.

Many business owners don’t think of banking in terms of a relationship. When choosing a bank, the focus is often on factors such as banking products and services offered, network size and availability, account features, opportunity to earn interest on accounts, and fees – all of which are important, of course.

But the value of a really good banking relationship can’t be underestimated and is one of the most important business relationships you will have. A client recently learned that first-hand when he moved his banking business to a new bank. He has become a raving fan of this new strategic financial partner and recently shared that he had no idea what a difference the right bank can make.

In a recent conversation with Cheryl Spirek, Vice President of InBank, she pointed out that, “One of the most important roles your bank will fulfill is helping your growing business get the capital needed to support that growth. So, you need to choose a bank that is a fit for your individual business. It’s important to take time to schedule an in-person meeting and interview the banker to find the bank who will be your long-term financial partner. After all, this is not about just a transaction but about a full banking relationship for your business.”

Here are five things to consider when choosing your bank:

  1. What size businesses does the bank typically work with?
    Not every company is a fit at every bank. Some banks specialize more in small business lending, while others focus only on requests over $500M. Some are not directly involved in the process, only the sale of lending products. It’s important to inquire about the types of businesses that are a good fit for the bank to determine whether your company meets the same criteria, which will make for a smoother transition and a better overall relationship.
  2. Does the bank tend to work primarily with specific types of industries?
    How much a bank understands the complexities of your industry will have an impact on how well they will be able to serve you and your needs, and how readily they will lend to you.
  3. Will a designated representative be assigned that works with you regularly?
    Your banker needs to know not only your industry but your individual business, be familiar with your financials, and know you – the person behind the numbers. They will be the strategic financial partner who will help you face business challenges, understand what you need when you need it, and offer guidance throughout your business lifecycle.
  4. What will be required from your business when you do need to borrow?
    A bank will consider your financials, projections, level of debt, cash flow, collateral, even the personal financial performance of the business owners. Ask about their terms, conditions and covenants related to borrowing. Find out early whether they offer primarily short-term or long-term lending, or both. It’s important to know in detail what criteria your ability to borrow will be based upon at the time you’re choosing a bank, rather than being surprised when you actually apply for a loan. Ask about other lending products as well such as a working capital line of credit.
  5. What is the bank’s capability in terms of technology and what security measures are in place to protect your accounts and information?
    This would also include their policies for processing transactions, such as safeguards that are in place to protect against unauthorized transfers, how they verify your designated, authorized, banking contacts, what layers of security are in place, and what types of alerts are offered.

It’s important to know the products and services your bank offers, of course. But take time to do a deeper dive into assessing the relationship you will have with the bank you choose. It may very well be one of the most long-standing business relationships you’ll have and certainly one of the most impactful.

I’d welcome the opportunity to help you identify and assess your banking and borrowing needs as they align with your growth path or discuss other financial needs of your company. I invite you to contact me for a complimentary consultation.

Written by

Rick Arthur is a CFO whose expertise is built on Financial Intelligence and 35 years in senior financial roles. Coupled with a CEO’s perspective and the experience of building his own $20 million company, he brings a unique depth of insight into business from the top down. Wired to get to know people, Rick works hand-in-hand with business owners of intentional, growth-oriented companies, solidifying relationships as a trusted advisor and confidant to his clients. He leverages his experience to help business owners gain traction and stay laser-focused on the company’s vision, cash flow, and profitability – all while creating big picture solutions for strategic planning, growth and sustainable success.