It is often forgotten that banks are businesses like any other and focus on similar issues. Companies have far more in common with their bank than they think. They both have the same business issues, namely a competitive marketplace, a need to identify and service their customers, and a need to achieve a satisfactory return for their shareholders. Banks also operate within the same business, political and economic environments as all other businesses.
The key business of banks is to lend money, and as a result they are looking for opportunities to provide funding in one form or another to business. If banks are to achieve their business objectives, they need their customers to be successful. As a result, banks will provide whatever support they can to help their clients achieve success.
Banks use a credit process to identify what support they can provide to their customers. This credit review process is only a part of the ongoing relationship between the bank and their customers but is often the most high profile and the most misunderstood. There is no hidden agenda or secret formula to this credit process. It is a simple process that begins with the collection of information on the business from the customer. The better the quality and the level of the information that is collected at this early stage the more the likelihood that the credit process will result in a successful outcome.
It is important to remember that the relationship manager, the customer has contact with, is their advocate within the bank - so the better the information they have, the easier it will be for them to put together an application for lending. Too much information is certainly better than not enough. It is also important to remember that financial information is only part of the package. Banks do business with people and information on the company and its people is equally important. The information required should include a concise and accurate business plan that clearly lays out the goals and aspirations of the business. Detailed information should be provided on the company background and history and the management team, together with an outline of the market dynamics including customers and competitors. Financial information is also paramount and must include historical and projected balance sheets, profit and loss and cashflows.
The relationship manager will compile this information into a report that is presented to an internal risk assessment team, who will review the proposal first independently and then in conjunction with the relationship manager. During these discussions the relationship manager will be the customers advocate so the better the quality of the information they have the better the job they will be able to do. If they have a complete understanding of what a customer wants and needs, they will be able to ensure that they do not waste time reaching an agreement that is not acceptable to their customer.
In addition to providing suitable information to assist the credit review process, and working closely with the bank throughout this, here are a number of other keys to a successful bank/client relationship. It is important to ensure that the bank gets involved as early as possible in any new proposal or review process. In this way they can provide as much input as possible to the process. It is also important that both the bank and client keep each other fully involved and informed – nobody likes surprises. Above all it is important to remember that it is a two-way relationship. A bank is a business partner and clients should be comfortable using the resources and strengths of their bank. Finally bank’s bank people and if they do not see or hear from their clients they can not provide the appropriate service for them.
