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How is your relationship with your Bank?
Bank bashing in Australia is now a national sport. Banks have always been easy targets for criticism as they control something that all of us want and need, “money”.
At present there is plenty of government and media focus on the banking industry. As a Commonwealth Bank customer I read with interest about the current scandal associated with money laundering and the huge fines that could be levied against Australia’s largest bank.
There are currently a number of Government investigations underway into Australia’s banking sector as well as a proposed Royal Commission into the Banking Industry, but what does all this mean for me and my relationship with my bank?
My belief is it won’t change how I deal with my bank, as in reality my relationship with my bank is via my personal business banker not the bank logo on the front door.
Creating a good relationship with a bank is all about getting to know your relationship manager. Mine is Brett and I regularly keep him informed of what is happening in Hamilton Taggart Business Advisors business.
Banks and banker’s have never liked surprises, they would prefer to hear about bad news from the customer rather than finding out themselves. It is human nature to share good news and try and hide bad news, but having an honest, open relationship with your banker makes good business sense.
In today’s online banking environment all major banks have the ability to regularly track cash flow through your business and private accounts. Spikes and movements in your business account operations are monitored and it’s important to keep your business banker informed of any change in trading conditions within your business.
Cash flow and your ability to repay the debt has always been the key driver when banks assess if they are going to lend you money. Bankers will never be happy when a business customer maintains a high level of debt on an interest only loan. Interest only loans are helpful in the short term so you can purchase that essential asset, but to keep it, you must start paying the loan principal down.
Ensuring your business is profitable and competitive in today’s uncertain economic environment is essential for all small business owners.
At Hamilton Taggart’s we can help you to understand the numbers and financial drivers in your business. We can also provide you with some detailed analysis of your business like cash flow budgeting, break even analysis and benchmarking of your financial performance.
Being up to date and on top of your financial and income tax obligations will ensure that you will continue to have an excellent and profitable relationship with your bank and your business banker. Give us a call today to discuss how we can assist you, (02) 4962 2022.