Communicating With Your Banker Makes A Difference

I speak with many small business owners every day, all over the country, all dealing with many different banks. I can tell you very definitely that how you deal with your banker makes a huge difference.

The best and most effective approach is to stay in constant contact, especially when things are tight and problems exist on the horizon. The more communication the better. Even if it is bad, talking about what you are doing to turn the situation around, talking about how you are lowering your expenses, talking about anything is meaningful as long as you are keeping your banker in the loop and aware that you are paying attention and that you are reporting to the bank with an honest attempt to do the right thing and support your business. Even if in deep arrears the banker will most often appreciate the candid discussion that keeping in touch with clear communication will yield.

The result will be a much, much longer tolerance period before the banker is forced to do something, maybe even years of delay. As long as you are talking he will probably resist pulling the trigger on you. I have enough examples of this to candidly tell you this works. It is the best policy possible and it reaps tremendous benefits. The banker may never actually do anything for you, however, leaving you alone is often the best thing possible. Talking often and candidly achieves this end.

So many borrowers in default prefer not to talk at all or to talk only when called and this leads to unilateral action and never good news. They fear that talking about the problems will prompt the bank to take action when the opposite is more true. Not talking at all is very dangerous as when the defaults start piling up, the banker will have no choice other than to turn it over to counsel. Talking occasionally when called is almost as bad as it shows bare minimum cooperation but no initiative or desire to work with the bank so the bank will be less likely to work with you.

Remember, bankers are people just like you and me and everyone responds better to the truth and respectful communication honoring each other’s position. You have much more to win than lose by staying in communication with your banker. It seldom works out poorly.