Ideally, the relationship with your bank should be one of mutual need, so consider whether the staff at your bank regard you in that way. Your bank should be a source of information and help and should offer a package of services.
2. Think local
Does your bank provide you with a main point of contact, and is s/he based locally? Does your bank give you access to specialists?
3. Know your bank's charges and terms of service
You should make sure you know the dates on which charges will be taken from your account. Your bank must, by law, provide you with pre-notification of charges. You should also be aware of whether your bank could cancel your overdraft without notice and what would trigger such a change. Think about what you can do to avoid problems and misunderstandings.
4. Watch out for developments in the banking sector
It is a good idea to keep an eye on developments in this sector and look at whether your bank is keeping up with the rest of the market.
5. Take a fresh look at what services your bank can offer
Have you thought about electronic/telephone/internet banking? What about using Direct Debits and BACS? Methods of making foreign payments? Options for investing available cash? There are lots of other services banks can offer, such as business credit cards, insurance, management of vehicles and factoring of debts. Make sure you are getting the most out of your bank!
6. Keep your bank informed about your business
It is a good idea to discuss your plans with your banker and also to show periodic statements of results to the bank. Invite comments from your banker and highlight potential bad debts. It's a two-way relationship and, like any relationship, gets better the more you communicate.
7. Give the bad as well as the good news
Make sure you tell the bank what is happening and how you plan to turn things around. Does it realise you have recognised problems and are addressing them?
8. Keep a copy of your bank mandate
You should know exactly who you have authorised to sign cheques of stated values and other documents on behalf of the business. Also make sure you have a copy of your facility letter or loan agreement, if relevant.
9. Shop around
It is much easier now to swap banks, so shop around and compare your bank's charges to those of other suppliers. Look at whether its fees are acceptable based on your trading volumes and conditions and whether you are on a fixed tariff or a negotiated tariff. Make sure you have agreed how you will request, and be charged for, special 'one-off' services. Do you have an agreement that says prices will be held for a fixed period?
10. Choice and flexibility
Look at whether your cash is where it should be and whether you could gain more choice and flexibility by using more than one bank. Ideally, you should be able to easily move your money to earn higher rates of interest. Let the bank know you have accounts with other banks and negotiate, when possible.
About the Author
Len Collinson has been the FPB's National Chairman since 2002. He is a founder and a director of Collinson Grant Group, the firm of international management consultants, and has investments in three other companies.
