A banking relationship is the same as any other relationship; you’ve got to work at it.
As I said in a previous post about banking relationships, there are multiple players in a bank. There is your account representative, who you can think of as the marketing person for the bank – their purpose is to sell you a loan. There is also the credit department, the people who do the evaluation to see if you qualify.
This is an important distinction. Just like how when we do a bid, the business development person is not necessarily the capture person, the person you initially work with to arrange a loan is not the one who makes the final decision.
Other people will be involved on your end as well. Your lawyers will need to talk to their lawyers, and your accounting people will also be involved.
To keep your credit intact you’ll need good relationships with all of these parties, and that means keeping communication open whether the news is good or bad.
Let them know if bad news is coming
If you’re losing a contract or bid, or something else isn’t going as planned, let the bank know as soon as possible. It seems contrary because we always want to hold back on bad news, but bad news doesn’t need to mean the end of your banking relationship.
For example, let’s say you’re no longer able to make a covenant. You can still continue on together, the bank will just need to waive that covenant. Partner with them to get all of that worked out.
Share good news, but not the hype
Also talk about good news. But remember that the bank is lending to you based on your current situation and your current cash position, not on any hype that you may feel about your future.
There’s nothing wrong with talking to your banker about your prospects and what you’re bidding on, but never forget that whatever you bid on could be lost. The bank certainly won’t forget that. So don’t hype things that don’t really represent the true reality.
Every relationship takes care and feeding and your banking team is no different. Be honest and keep the lines of communication open. Help them to help you, because ultimately when you succeed, the bank wins too.
