Are you fully leveraging your relationship with your business banker?

While most small business owners have a banker, very few take advantage of all their banker can offer. Bankers can be a great resource, helping small business owners run and grow their companies. Great bankers aren’t just lenders; they’re strategic business partners, consultants, referral sources and operational advisors.

Bankers can be true partners to small businesses, and in this economy, that support is vital. Here are five ways a great banker can give you an edge:

Harnessing Industry Insight And Knowledge

A good banker won’t know just your business; he or she will be knowledgeable about your industry. Many bankers have access to profiles that provide an overview of a specific industry and focus on recent developments, trends and opportunities, financial information, executive insights, forecasts and ratings for that industry.  

They also have direct experience with other businesses in the industry and know first-hand how they’ve overcome challenges and capitalized on opportunities. An industry-savvy banker can be a strategic advisor and a valuable sounding board for plans and new ideas.

One Massachusetts medical practice found that the healthcare experience of its banking team was essential when it made the transition from paper to electronic records. The bankers not only understood the specific needs of the practice, they were able to connect the practice with an advisory organization and a software provider that specialize in helping medical practices implement medical records systems. The bank also provided a tailored loan to finance the project.

Cash Management

Accelerating incoming cash flow and managing payables more efficiently is essential for running a business in a tough (or any) economy. It’s one way to combat squeezed margins. Your banker can review and research your account structures and offer ideas on how to collect, manage, disburse and invest cash in a more convenient and cost-effective way. For instance, your banker might advise you to pay vendors by credit card rather than check and pay off the bills monthly to keep more cash on hand.

Bank technology is very effective in saving time and boosting cash management, but some business owners aren’t aware of its capabilities. Talk to your banker about available technology. For example, some banks offer same-day deposit for checks that are remotely deposited as late as 8 p.m.

Other strategies include using online access to initiate and collect payments, use zero balance accounting and access wholesale and retail lockbox services.

Bankers can also help their small business clients choose the best checking account, such as one with an earnings credit offset of fees. They can also advise on investment products, as well as lines of credit, loans and asset-based financing.

Protecting Against Fraud

Fraud poses a significant risk to small businesses, whether it’s employee theft or cyber-fraud resulting in the loss of sensitive customer data. While many small businesses think they’re not a target, that’s not always the case. Some cyber-criminals think they’re easier marks than bigger companies with more security resources.

Banks are understandably very focused on their own security and that of their customers; your banker can audit your fraud controls and offer products and solutions to correct weaknesses.

Some are commonsense fixes, such as having different people handle procurement and vendor payments, or requiring more than one person to sign off on checks or payments. Others are offered by the bank’s own security systems and include verification processes for checks, online deposits or withdrawals, as well as notification systems that flag any unusual transactions.

Established bankers have strong networks in their local and regional business community. They can recommend your business to their contacts, and connect you with other business owners who are potential customers, suppliers, advisors or sales leads.

In one case, a banker was attending a professional conference focused on condominiums and learned that a large complex was looking for a new property manager. The banker was able to immediately recommend one of his property-manager clients to replace the underperforming company.

Bankers can also help business owners find lawyers and accountants to round out their roster of professional advisors. The advisors can deploy their complementary skills to help business owners solve problems and make decisions.

Low-Rate Environment

While the low-rate environment has a negative impact on returns for your deposits, borrowing rates are very favorable. This might be a good opportunity to consider buying, rather than leasing, a building or other real estate to house your business. Your banker, who ideally has access to loan and leasing options, can help you throughout the process.

In one case, a banker was able to help a new medical practice client improve cash flow by reducing its monthly payments through refinancing existing debt at lower interest rates. The banker further improved cash flow by offering enhanced cash management and merchant service fees at a lower cost than the practice was paying in the past, and most importantly, provided the client with the benefit of the bank’s healthcare specialty banking.

Small business owners looking for an edge may have to look no further than their business banker. The best bankers, after all, are much more than lenders. They are partners.

Scott Frazer is vice president, business and professional banking, and Mary-Stuart B. Kilner is senior vice president/specialty business banking at Webster Bank.