Martin is a banker. And yet I like him very much. In a world where cabinet ministers indulge in cheap jokes designed to inflame anti-banker feelings, this probably comes across as a bold, even brave statement. But one I think that has to be made if we are to get back to a more normal level of bank finance for small and medium sized businesses.
Of course Martin is not one of those megabucks merchant bankers whose bonuses set the world (or at least Robert Peston) frothing with righteous indignation. He is an ordinary bank manager doing his best to do his job which is to provide finance and services to businesses at an acceptable profit. He and I spoke recently about how he believed that business can work with their relationship managers to improve their chances of getting the finance they need to develop their businesses.
Having a strong, honest and positive relationship with your bank he maintains is crucial. Relationship managers should be seen as trusted advisors who can become advocates for your business. They should be able to give you an honest assessment of what the bank is looking for, what risks it will perceive in your business and what tools the credit team use to decide whether to provide finance or not. They will explain what risk weighted assets are and why they matter, why structured finance is almost certainly the way forward and why cash forecasts are much more important than profit forecasts. By working with them in this way, you will put them in the best possible position to argue your case within the bank.
I can hear the catcalls already. Yes he would say that wouldn’t he. In the end the banks won’t lend whatever you do. The terms and conditions will be too strict. It is easy to be cynical but surely it makes sense to at least understand the rules of the game and give yourself the best chance of being successful, doesn’t it?
Banking is a simple business really. You lend money to a business that then pays it back with interest. And Martin would be the first to point out that this simplicity was something that banks clearly forgot about during the almost surreal atmosphere of the mid-noughties, where boom and bust had been abolished, and a brave new world of gravity defying economic paradigms was being heralded. Banks are still feeling their way post Lehman Brothers, and to me it makes sense to work with them to get them back on course.
OK maybe love your banker is still a step too far for some people. But even if you still want to see them as your enemy the old maxim of keeping them closer still applies. As Martin says when the customer, finance director or accountant and bank work closely and effectively together, it can be a formidable force. If “we are all in this together” has a hollow ring about it nowadays, then think of it as getting out of it together. It is likely to be the only way……