Traditionally a formality. The days when the bank manager just said “do you want the same as last year?” have possibly gone the same way as the similarly now inappropriate barbers quote.
Yet do you rely on that extension to your overdraft? Most businesses do – totally.
So consider what your banker will have when he or she comes to meet you. It could include:
- A history of your past discussions. Critically from when you first requested the overdraft (“I’ve got a good new contract, just need a bit of support, short term, perhaps 6 months, I don’t like borrowing money and I won’t use it to the full” – you can almost hear yourself saying it now!).
- A detailed computer profile of how your account has operated over the last year (maximum and minimum balances, number of days in excess or in credit, averages, trends, cleared versus uncleared etc).
- Bank produced ‘sector intelligence’ on your area of business (which may ‘tar you with the same brush’) with a Red/Amber/Green stance.
- An individually calculated ‘Risk Grade’ for your account (computer generated from a very clever – artificial intelligence – ‘black box’). This may drive many of their decisions.
- A thorough analysis of the latest accounts that they hold. They have the software to do that and although you may not have handed them the accounts if they are ‘filed’ they may find them for themselves. That analysis will look at trends, ratio’s, comparisons to similar businesses etc.
- An update of what they believe that their security is worth.
- Third party knowledge about your business. Don’t forget there is a very good chance that your suppliers or your customers also bank with them.
- An ‘objective’ for the meeting – which could be to reduce the overdraft, alter their pricing, improve their security, or suggest another form of borrowing.
What do some businesses have for the same meeting:
- The kettle on…..(“Who was supposed to pick up the milk this morning?”)
- Perhaps the year-end figures that the accountant finally got to you yesterday but which you haven’t had time to look at yet.
A caricature perhaps – but I’ve seen it happen myself as a banker. I also now get those calls from business owners, exclaiming that the bank manager has called and is cancelling the overdraft – help!
Well, yes I can – normally. But far better to treat this as a professional meeting, with a need for careful preparation well in advance. It will not be lost on any business owner that the banks information is mainly historical or of a ‘predictive’ nature. Yet you should know more about your business because you know the most important facts: What is your business doing today and what is going to happen in the future?
This meeting should be about you presenting to the bank – with a clear agenda, professional documentation, compelling arguments, well thought out objectives – and with empathy as to what they need to achieve.
As a business owner said when I supported him with his successful overdraft renewal meeting recently: “That was like a proper meeting!”