Magazine article Business Credit

Working with Banks as a Government Contractor

Magazine article Business Credit

Working with Banks as a Government Contractor

Article excerpt

Learn What Information the Bank Requires

Different banks require different sets of data, and that data often varies with the business in which the company is engaged, It is necessary, therefore, to understand completely the requirements. But both the company and the bank benefit if the company representative(s), hereafter referred to as "you" for die sake of brevity, do more than simply hand over the packet of required information. You will save both yourself and the bank time and effort by, as well as present the company in a more favorable light by being guided by the approach respectfully suggested below

Introducing the Company

Many, if not most, bankers are not technologically literate. Consequently, your purposes and theirs will be better served if you keep your information on the company simple enough for them to both understand it and to relate your story effectively within the bank. Since many commercial credit requests are approved or declined by bank loan committees, the banker must be able to describe the company effectively to the committee if your request is to be approved. Tell the banker what the company really does in rendering its principal services and/or what its primary product lines are. Many companies are engaged in multiple activities, but limit your introduction to the company's bread and butter business.

Discuss your key people in the three major areas of the company: management, administrative functions, and technical activities. Limit the list to those people who are indeed key to the company. Describe their skills and backgrounds, both educational and work experiences; and remember to tell the banker who owns the major shares of the company.

Describe your major clients and what you do for them. Of coupe, if die work you perform for some or all of your clients is highly sensitive to national security, you may be able to tell little or nothing other than in very vague and limited terms. (If the banker does not understand your restrictions, you may be talking to die wrong bank.)

Talk the banker through your contract portfolio relative to your major contracts. Point out your major prime contracts, subcontracts and commercial contracts; and, to the extent permitted, identify the clients of each. Identity the types of contracts: cost reimbursable, time and material, labor hour, firm fixed price, or other; and identify the indefinite delivery-indefinite quantity (IDIQ) contracts.

The data package you deliver to the bank should include your corporate capabilities statement or your web page address and resumes on your key people. Those resumes may be limited to: positions held and current and past responsibilities within the company, previous work history, and education.

Continuing Communication With the Bank

Effective communication strengthens any relationship, and the relationship between the customer and its bank is no exception. You would be wise to establish the routine of regular communication sessions with your banker. The minimum frequency should be quarterly The sessions can be as brief or as long as is appropriate and can be done informally by telephone, although Pace-to-face meetings are advised when significant events require attention and discussion. At a minimum, apprise your banker of material developments in your company. It is critically important to alert your banker as soon as you discern the development of a serious problem. That affords your banker the potential to be a part of the solution, at best; and to understand the seriousness and probability of the reality, at worst, in any event, your banker is not subjected to unpleasant surprises at the eleventh hour. The following guideline is not a bad idea: make your banker the first to be told the bad news; let him/her read the good news in the paper. And finally, make every reasonable effort to get to know, and be known by, the decision-makers in your bank who will have the final say on banking matters affecting your company. …

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