External Relationships – Banking

Your banker is among the many key relationships you must build and develop as the CFO. It is important to understand and treat your and your Company’s relationship with your bank as a Partnership. While you clearly have needs that you are approaching the bank for assistance with, they have needs as well.
For smaller companies who have on-demand LOC’s collateralized with everything under the sun as well as personal guarantees, it is more important to build the relationship and look to shed some of the restriction that the bank has on you. This can happen over time. Business performance, consistency where possible (tongue planted firmly in cheek) and communication are the keys to building and evolving your relationship with the bank.
Communicate, communicate, communicate. At least quarterly you should be meeting with your bank to review the statements for the past quarter and provide them with color (see earlier post on why it is important to know your business and its drivers) on what has happened and what you see happening over the next quarter. It is really important that you not surprise your banker. Most good bank relationship managers especially on the tech side have seen pretty much every situation that your Balance Sheet is going to go through and can help you navigate the bank’s sore points and keep you on side. The biggest problems with the bank always happen when you have presented them with a glass half full picture of the business and then disappont with no warning. Be open, honest, realistic and treat the relationship and the person with respect and they will go a long way to assist you through your turbulent times. They also have a lot of contacts that you can leverage to help resolve a miriad of different business issues.
Some good folks I have had the pleasure of dealing with on the tech side who really understand the space and will go to bat to help you and your business are Jerry Tsao at RBC in the KW Knowledge Based Industry group (www.rbc.com). RBC has been around the tech space in Canada for quite a while and stayed the course several years ago when many of the big banks bailed on the tech sector. As a result of their commitment to the space they are probably the largest player for funded tech companies.
More recently I have met with Rob Rosen at Comerica Bank (www.comerica.com) in their Technology and Life Sciences Division. Comerica seems to be very aggressive in the Canadian market right now and despite their legacy in the auto industry they have expanded into many different verticals through acquisition and aggressiveness in the market.
If you would like an introduction to both or either please drop me a note.
The important message to note is that honest communication with your banker can help you manage many challenges you will face. Your banker wants you to be successful and you are on the same team. Let them help where they can, provide guidance where appropriate and treat them respectfully. This won’t necessarily keep your Company out of hot water but it will provide you with a respected business partner who will help make your life easier.

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