I rarely see a company that has changed banks since it was initially founded. Usually, the founders pick the bank that they already bank at themselves and open up an account for the business. If the company stays small, there is little benefit in looking for other options as the convenience of having a single bank for personal and business is not worth losing. However, not all banks are alike and not all banks are as good this year as the last when it comes to business services.

If you have a line of credit with a bank, but you rarely use it, consider: is that because you do not ever need it or because the cost of using it makes it much less useful? Small community banks and credit unions often have very pro-business attitudes. They are proactive in finding SBA programs and ways to help their business customers financially through auxiliary services. So the same banks that are less convenient for personal banking, due to limited geography and lack of locations when traveling, may be the best banks for your growing business.

Having a business banking relationship with a large bank may not get you much in the way of services, even if you do millions in transactions with them. Of course, just because a bank is small does not mean it’s business-friendly either. You will have to do some research or have a consultant do that for you, to see which bank can do more than just hold your money, but also give you a strategic advantage.

I’ve had several clients who were not even aware of all the banks the company had accounts in, because they assumed the CFO was being proactive about managing financial relationships, only later to discover that banking decisions were made out of personal convenience and not primarily for the economic benefit of the company.

Keep in mind that banks are probably not the only financial institutions with which you interact. You may be using a third-party processing service that specializes in getting you the best rates on credit card transaction processing. Benefits like credit card points provided to the buyer are often recouped by the issuer from additional transaction fees the processor charges you. These processing fees can put a big dent in your bottom line. Good processors will have relationships that will save you money based on the type of business you have and the goods sold. They also often have contacts with other service companies which may be useful to you and save you money. Likewise, private lines of credit are often available but not well publicized. Remember, you won’t know what relationships could benefit you unless you ask your vendors to make introductions.

While having the best banking relationship will not make or break a company, it is often a neglected aspect that can help bolster the bottom line with reduced fees and provide the most cost-effective loans when cash flow doesn’t allow for fast growth.

 

Excerpted From The Original

Beyond Sales: 50 Business Problems Every CEO Needs to Solve

Foreword by Roy H. Williams

Gene isn’t a journalist, but he is most definitely an investigator.
I was talking to a friend who employs about 250 people in 3 different companies when he mentioned that he had hired a specialist to figure out what was wrong with a company that was underperforming.
“Who did you hire?”
“A fellow named Gene Naftulyev.”
“He’s going to figure out what’s holding you back?”
“Yeah. He’s famous for it.”
“How famous?”
“Procter & Gamble. American Express. Kraft Foods. Target. They’re all clients of Gene’s.”
“What does he do, exactly?”
“He improves profits without spending money.”
“But how?”
“Process re-engineering, operational optimization, making business units autonomous, negotiating employee and consultant contracts and a hundred other things like that. It just depends on what you need. He refines the core of your business so that you become more efficient, have fewer frustrations and make more money. Naftulyev can always spot the problems and his fixes are famously quick and easy.”

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