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Tips for Effective Communications with Your Banker

If you consider your banker a partner and ally for your organization, it is easier to have a productive conversation about your organization's finances. This is always in your best interests, but is especially important in economically uncertain times. As Dave Swanson of US Bank put it, "I would recommend that any client, nonprofit or for profit, be proactive in building a relationship and communicating with their banker."  

Communicating wth your Banker

We spoke to a number of bankers who work with nonprofits, and they all echoed the same sentiment - bankers want to be a resource and partner for their nonprofit clients. If you have a question or concern, they encourage you to pick up the phone. And they all suggested nonprofits regularly share financial reports with their banker. Having timely and comprehensive information will help your banker make adjustments and better meet your needs.

If your organization is facing financial challenges, sharing that news will be hard. It's human nature to try and delay difficult conversations. However, the reality is that your banker will find out what's happening. And it's much better if they hear it from you in a timely manner. In this economy, you are not alone. Many organizations are struggling. Being direct, honest, and transparent with your banker enhances their ability to help you.

A conversation about your financial situation also allows you to get feedback from a trusted adviser who knows your organization. Your banker has valuable experience and might notice something you did not see. As Ron Zweber from Bremer Bank said, "It's about finding the appropriate solutions to move forward."

Sharing your organization's response to challenges can be an opportunity. Mr. Swanson elaborated: "Be forthcoming about what happened and share your plan to address the situation. Tell your banker what steps you have already taken and what you are doing next. It shows that you're being smart and strategic in responding to change. It also illustrates that you value your relationship with your financial institution."

A valuable reminder from Carol Maloney of Western Bank is that "Even if you have concerns, that doesn't mean nothing good is happening." Your banker, especially a banker with whom you have a good relationship, knows that you are doing good work. Ms. Maloney continued, saying: "Bankers are always happy to meet with clients. Invite your banker to your organization, show them around and tell your story - your successes and your concerns." 

Suggestions for Proactive, Positive Communications with your Banker:

• Understand and Comply with Your Loan Agreement: Your loan agreement is a contract with your financial institution. It's important to know the exact terms of this agreement. In addition to laying out the interest and principal payment schedule, it often includes covenants that specify what financial statements are required, as well as other restrictions or conditions. If you are unable to comply, communicate this with your banker and continue to fulfill the other terms.  It's also important to adequately maintain deposit accounts, with special attention to avoiding overdrafts.

• Keep the Information Flowing:  Bankers appreciate it when their clients send them financial statements on a regular basis, such as monthly or quarterly. If reports are delayed for some reason, send a quick email that estimates when they will be available.  It's a red flag if the flow of information stops or becomes irregular; you are better off being honest rather than withholding information. Bankers also welcome receiving other relevant materials, such as financial updates from the board minutes.  Put your banker on the mailing or email list to send them information about other events, fundraisers, and other organizational updates.

• Meet with Your Banker You want to be seen as a smart and capable organization, responding to the economy strategically. Identify ways that your organization can address your financial challenges. It's ok if you do not have everything figured out. However, your meeting will be much smoother if you can share a an outline of you plans. Update your banker about your programs and activities as well the financial picture.

• Be Confident: Make sure you understand your financial situation and are comfortable discussing your financial statements. If it would be helpful, consider bringing the board treasurer or other organizational leaders with you. Treating your banker as an ally and stakeholder will enhance your working relationship and their commitment to your organization.

How Nonprofits Assistance Fund Can Help

Nonprofits Assistance Fund can provide strategic guidance to help you work with your banker. We can help you understand your current financial situation and become more familiar with your financial statements. We can also help you identify strategies to manage and adapt to the changing economy.

Contact us to learn more about our Financial Needs Assessment and other services.