How to Be Your Lender’s Best Customer
In this new economy, banks and lessors want more assurances than ever that your business is healthy. Having an answer to these questions will help keep your credit lines safe.
Who are your best customers?
Are they the people who do business with you on a regular basis? Do they have their paperwork up to date and do they pay on time, or early? Are they easy to deal with and always polite to you and your people?
Just like you, your lender is a business. And just like you, it wants to support its best customers. Nowadays, a good relationship with your bank or lessor is one of the most important factors promoting the health of your business.
So, "Are you one of your lender's best customers?" If you have a hard time answering that question, then you have some questions to answer for yourself.
Do you have a fleet plan?
The first step is to put together a fleet plan for the next 12-24 months.
Remember it is just a plan; it is not etched in stone. However, it should show your lender at what point you'll need to add cars to the fleet and when you plan to sell or send them back. If your business loses 20 percent in sales, can you show your lender how you'd handle it? Be prepared.
A simple spreadsheet with a list of vehicle types on one axis and the 12 months of the year on another will help you approximate your funding needs.
Every so often, manufacturers will offer a special discounted price on fleet units for a short time period. Make sure your credit line has enough flexibility to take advantage of these opportunity buys.
Do you have up-to-date financials?
In this day and age, if your bank or finance company calls and asks for a copy of last quarter's financial reports and you tell them it will take a couple of weeks, you've raised a red flag. With the right accounting software, you have no excuses; you can be current everyday.
Underwriters also look at credit scores, so make sure your Dunn & Bradstreet ratings and FICO score are up to date. Also, make sure you have letters in your credit file to explain any past discrepancies.
Do you know your lender's current policies?
With the changing landscape in the financial industry, lending policies can change weekly. For example, the Fed can issue new requirements as banks buy banks, fold or get taken over, which changes their loan policies.
It is not uncommon today for a bank to buy another bank and impose new policies on its customers. This may mean the fleet customer will need to reapply for a new credit line.
You need to check with the bank on a regular basis about any changes in policy and loan requirements. If you receive a policy change in the mail, read it. If you have a question, call. If you don't like the change, call.
Does your lender know who you are and what you do?
Does your financial package include an executive summary with bios? You should also include a company profile with a description of your market and what distinguishes you from your competitors.
At one time, banking was a personal business. Now decisions are often made by computers located thousands of miles from a bank. Still, fostering a personal relationship can open doors normally closed.
You would be surprised how little bankers know about how their customers make money.
When they look at your fleet, what do they see-a giant mobile liability that is losing value on a daily basis, or a well-managed asset?
Show your bank that you really understand your business. Offer to take your banker and his or her boss to lunch. Ask if there is anything you can do to make their job easier. Invite them to your office to meet your team. And don't forget to always send them your updated financials at the end of every quarter. Do not wait for them to ask!