How to make the most of your bank
- 1 Find out which individuals you will normally deal with; meet them and aim to build a personal relationship.
- 2 Explain your business to the bank; show them a copy of your business plan and give them the chance to comment and make suggestions.
- 3 Invite your bank contact to visit your premises to meet key employees and to get a better understanding of your business.
- 4 Use your budgets to forecast your cashflow; give the bank as much advance notice as possible of any anticipated financing needs.
- 5 Build a safety cushion into your financing; consider worst-case scenarios.
- 6 Keep the bank informed; let them know when your plans change.
- 7 Investigate the availability of loans and other forms of finance for long-term requirements rather than relying entirely on your overdraft.
- 8 Consider fixed-rate loans (if available) to help with cashflow planning.
- 9 Always ask for a clear explanation of all the costs involved in borrowing - for example, arrangement fees - as well as the interest rate.
- 10 Manage account balances; use Internet banking to reduce costs and increase efficiency; move any spare cash the business may have to a savings account paying a higher level of interest.
- 11 Investigate whether other services the bank can provide (eg credit cards, insurance, pensions) are competitive.
- 12 Consider consolidating as much of your financing business as possible with one bank to make yourself a more valued customer and reduce the interest payable.
- 13 Keep your promises to the bank: provide information when you say you will, make payments when they are due, stay within your overdraft limit.
- 14 Warn the bank immediately if you face payment difficulties; work out a solution together.
- build a personal relationship
- forecast your financing requirements
- plan for worst-case scenarios
- demonstrate that your business is well managed
- keep the bank informed
- negotiate the terms of loans
- rely entirely on overdraft financing when better alternatives are available
- let spare cash sit in a current account earning little or no interest
- hide financial difficulties until it is too late