Business mentor: Getting your bank to work effectively

Q: I'm setting up a retail business and am looking at my banking options and requirements. What are the key factors I should be considering to ensure a productive relationship with my bank?

* Sarah Trotman, small business sector specialist replies:

A: Managing the financial affairs of your business can be daunting, especially when you have so many other things to focus on when setting up a business.

However, if done well, it can quite literally pay dividends.

I recently reviewed my banking options when looking for finance to support the growth of my business initiatives. I don't mind telling you I chose to go with ASB Bank and here are some of the key factors I identified through the decision-making process.

Support

For businesses like mine, a bank should provide a dedicated business manager. They are there to come to you and talk about your business requirements and discuss the range of products and services that best suit your business.

Your business manager should be supported by business account managers who look after day-to-day management of accounts and are available to act as a sounding board for ideas and make recommendations about financial solutions best suited to you and your business.

Technology

People use technology in banking more and more and it is perfectly suited to small businesses. With internet banking, you can save time and money - fees are typically lower for electronic products and you can avoid having to spend valuable working hours in a bank branch.

A comprehensive internet banking service that has been developed with busy business people in mind was a must for me.

In addition to typical personal banking, internet features small business owners should look for are functionality such as direct credit batches, electronic cheques and IRD payments. Ideally, it is available 24 hours, seven days a week meaning I can manage and keep track of my accounts whenever I like.

You may want to check if you can link other technology such as accountancy software to your online banking platform.

It is about automating as much as possible and reducing paperwork so you can focus on working on the business.

Information

Whether you have a relationship with a bank or are looking to deal with a new bank, life will be a lot easier by keeping your business manager informed.

Simple things such as balance sheets, profit-and-loss records, business plans and transaction history will help a bank get a feel for your business. This will enable them to provide the best solutions and can be crucial when it comes time to look for additional borrowings to fund growth.

Often small business owners look to borrow against the assets of their company, rather than personal assets such as houses. Being able to prove a stable and consistent business history could be crucial in securing a loan.

Structure

Making sure the legal structure of your business is correct is essential for small business owners. Your business manager should be able to give you advice on what professionals you need to consult to ensure liability and taxation matters are addressed.

Full service

Have a look at the range of financial services your bank can provide above and beyond business banking. Being able to use the same bank to arrange everything from insurance to share trading and pension schemes can make life a lot easier and save you fees.

It is also important to think about your long-term goals as well as your short-term ones.

Don't be afraid to ask for help from your bank - they have business specialists who are there to understand your business.

* For more information contact Tracey McKeown at (09) 376-2701.

* Email your small business questions to Georgina Bond.

Answers are courtesy of small business sector specialist Sarah Trotman.