The Banking Equation

24 April, 2020

The banking equation goes something like this – “when you want cash, you can’t have it, when you don’t need it, you can have as much as you want”.

There is one thing for sure, that is, the banks will be inundated with calls for assistance. As a business owner, what you need to do is to make the banks job as easy as possible.

We shouldn’t just be going to the bank saying, “I’ve got a problem and need help”. Ideally the bank is going to want to know the following:
• What the problem is
• The size of the problem
• What caused the problem
• What we are doing about the problem
• How long will we need the funds for

The banks will normally support anyone who can demonstrate that they are on top of the situation and know exactly where their business is at and how they can fix any problems they have.

All we need to do as business owners, is make sure we are doing a couple of things as follows:
• Keep the bank in the loop of what is going on
• Demonstrate that as a business owner we know what is going on
• Capable of making the hard decisions to keep our business is viable

There is no doubt that the world has changed over the last 5 to 6 weeks and it is now more important than ever that we communicate effectively and constantly with our financing partners.