What should I consider when exploring banking relationships?
When choosing a bank, business owners often look for benefits like free checking and online bill pay. While those are still relevant in today’s world, business owners might fare better if they look instead for a bank that has a mindset of helping customers succeed.
Bankers – like lawyers or accountants – can be valuable partners to a growing business. They offer resources and experience that can help anticipate and successfully navigate issues that arise. A problem-solving financial partner will help you respond quickly to a rapidly changing environment.
Money-saving business insights
Good bankers care about their customers and welcome the chance to learn more about their business. A banker who understands your cash flow needs and payment processes may be able to suggest ways to speed up your billing or collections process, allowing you to hold onto cash longer.
Better interest rates and loan terms
One way to grow profits is by minimizing expenses, and a key approach to minimize expenses is through lower interest rates and favorable loan terms. A collaborative banking relationship may help you accomplish both. Higher rates on deposits are also possible, especially as your banking relationship expands and the value of your deposits grows.
Fewer or reduced fees
Banks tend to reward customers who consolidate their accounts at their institution. By taking advantage of more of your bank’s products and services, such as merchant services, business credit cards or financing, you may be able to negotiate lower fees.
Greater confidence in decision making
Business owners typically know more about their own products and services than about debt ratios and receivables. Bankers can be both a teacher and a sounding board. By reviewing your business plans, financial statements and tax returns, they can help you understand your borrowing capacity, making it easier for you to move quickly and confidently when opportunities arise.
The bottom line: A strong banking relationship can create many opportunities for small businesses. Perhaps most importantly, it can give you confidence that your financial results align with your goals.
- What to look for in a merchant services provider (hint - it's more than just card acceptance and rate).
- How can I avoid common business risks?