Build Several Bank Relationships to Serve Changing Business Needs

Many businesses rely on a single business relationship, often just one person, to support nearly every aspect of the company. No, it’s not the office manager and it’s not the chief executive. The one relationship that underpins all others is with the bank.

Having just one bank for all your company’s financial needs is a risk, particularly during tough economic times when you need them the most.

In good times, banks support growth. In bad times they can cushion the blow. But this only happens when you have several strong relationships. If your banking relationships start and end with a person at a teller window, take action now.

The Right Tool for the Job

A great banking relationship is an important tool in your business toolkit, but no single bank can provide all the services you need all the time. As your business grows and changes, you may go from checking accounts and small loans to international wire transfers and cash management accounts.

The small community bank that helped you buy your office building will likely shrug its shoulders when you ask about sweep accounts and lock boxes. Likewise, giants such as Wells Fargo and Bank of America can provide amazingly complex services, but their policies and services are so rigid that negotiating a small loan with them is nearly impossible.

If your business needs are any more complex than a checking account (if they’re not now, eventually they will be), start building multiple banking relationships today. And within each bank, be sure you know more than the tellers. Especially in banks where vice-president-level customer support personnel turn over frequently, be sure you are meeting them on a regular basis.

Playing the Field

Maintaining multiple banking relationships is a bit like dating: You can play the field, but don’t expect everyone to be happy about it. When you are negotiating a loan or a line of credit, for example, it’s likely the bank will expect you to move your checking and deposit accounts over to it. And once it has your checking, count on the bank to ask for your credit card merchant account too.

This kind of banking exclusivity may be a benefit in the short term (bundling services at a bank can get you reduced fees and lower rates), but in the long term be sure you continue to woo other banks and spread your business out. When the need arises for a different set of services, it’s best not to start over with a new banker. Have a few relationships in your back pocket, just in case.

How Many Is Too Many?

Managing multiple banking relationships can have its downside. Managing checking accounts at more than two banks, for example, can make regular payments needlessly complicated. Keep it simple. Select a primary bank for accounts receivable and accounts payable. Keep at least a main checking account and a line of credit there so you can pay vendors and employees smoothly and quickly. If you need international services, a secondary bank could handle wires, transfers, and import-export matters. If your business grows, a secondary bank could handle other discreet functions such as treasury management and payroll.

One-off loans for cars, equipment, and office property are also a good way to start building new banking relationships for the future without complicating your own operations. Having a third or fourth bank holding a car loan can spread your exposure and establish your reputation with the bankers you may need later.

Finally, no matter how many banking relationships you have, remember that they all take work. Making a loan payment every month is not enough to build a personal relationship that will support your business in good times and bad. Get to know the people at your banks, and, more important, make sure they know you. Then when you need something from a banker, you’ll be well prepared to pick the right one at the right time.