Interview: On banking relationships in a down economy …

bankDerrick Smith, senior vice president at MacKay & Sposito, Inc. (M&S) Vancouver, WA), a 67-person civil engineering, surveying, landscape architecture, planning, and construction management firm, says openness and honesty extends beyond the walls of the firm.

“I am surprised to hear that many firms are neglecting their banking relationships,” he says. “Somehow they feel the need to hide the firm’s condition from their lenders.

Instead, treat your banker as the partner they often are. Meet regularly with your banker, and overwhelm them with information about the state of the firm, key clients, and new market sectors. Share your corporate strategy, and update them as key milestones in your strategy are met. Your banker will appreciate the transparency and will become more invested in your firm’s success. This is equally important for those who have yet to tap significantly into outside lending. Once the economy turns, key banking relationships will prove critical to those who wish to borrow to capitalize on future growth opportunities.

“It also goes both ways. In this environment, firm leaders also need to stay abreast of the local banking environment. Doing so will allow you to anticipate weakness in your bank, and to act accordingly. A strong relationship will also maintain important lines of communication for those times when your banker may feel the need to disclose to you their challenges,” Smith says.

Taken from the staff written article:

Here’s what you shouldn’t do during a turnaround

This article first appeared in The Zweig Letter (ISSN 1068-1310) Issue # 829

Originally published 9/14/2009

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