Attended an event this week looking at how large Corporate ‘Investor Relations’ teams work in communicating with shareholders.
It reinforced for me that the same approach should be used to communicate with providers of debt and working capital. They are effectively stakeholders in the business (i.e. they can affect it and also be affected by it) and this includes your bank or private investors.
The principles are the same, namely that:
- They have a right to communication on how the business is doing
- In some cases it is built into covenants in loan deals – but businesses sometimes provide that information begrudgingly and often don’t take the opportunity to add any kind of ‘report’ and just send the bank the raw figures (sometimes doubting that the bank actually look at them!)
- The benefits are that you keep your access to funding, can perhaps bring down the price of your borrowing and have a more effective relationship
At a time when providers of debt (i.e. banks) are now asking the same kind of questions that an investor would ask, and are also prone to behave differently, it should become a state of mind on the part of the business owner that they ‘relationship manage’ the people that are critical to the business in this way.
So the question is: How should you best ‘Relationship Manage’ your bank ‘Relationship Manager’?