While something of a national sport, bank-bashing could unintentionally be harming your business, an adviser has claimed, who instead is urging SMEs to develop a more positive relationship with their lender.
At a time when heaping shame on Australia’s banks has reached fever pitch, thanks to a number of banking scandals and allegations of serious of misconduct arising at the financial services royal commission, debt advisory director at HLB Mann Judd Sydney, James Macfarlane, warned that doing so is far from useful for business owners.
“It’s tempting, particularly in the current environment, for SMEs to view their banks as being out to get them, but often this is not a useful approach,” he said.
“Indeed, the key message to take from the recent Royal Commission hearing into loans to small and medium enterprises is that SMEs are reliant on the finance made available to them by the banks, and many would be unable to grow without this finance.
“It is therefore vital for SMEs to work with their bank or funding partner in a professional and sensible manner, to ensure they achieve the best results.”
Among the royal commission hearings were several examples of businesses pushed into bankruptcy by Bankwest, following its acquisition by Commonwealth Bank. It raised questions as to whether Bankwest and the business leaders themselves could have done more, and worked more collaboratively, to save the businesses from collapse.
According to Mr Macfarlane, business owners can take more of a proactive approach to maintaining a healthy relationship with their bank.
“Any loans or financing arrangements shouldn’t be treated as “set and forget” – it’s up to business owners to make sure they are aware of any changes or new offers that might get them a better deal,” Mr Macfarlane said.
It is important that business owners understand all their obligations and requirements, and are able to provide up-to-date and detailed information on the business and its financial position.
“For instance, show you are in control of the business by creating regular management reports.”
Mr Macfarlane’s comments are contrary to those of another finance broker, Elie Ayoub of Invictus Finance Solutions, who last year claimed that SMEs want banks to leave them alone instead of checking in “every five minutes”.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.