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There are numerous micro- and macro- economic activities that are causing huge disruption and volatility across the business market currently. And while investment is perceived to be all about the numbers, allocations and risk portfolios, which it is, it is also very much about the human element. In fact, today, in such a volatile market, relationships between client and investor has become critical, and cannot be underestimated.
A solid relationship with your banking partner not only ensures that they truly understand your business, cash flow cycles and external market influencers but are then able to structure your portfolio correctly - giving the business access to the funds when they are needed most.
If we consider the established small and medium enterprise market for example, often optimising surplus cash is a neglected part of the business.
Of course, when businesses think of surplus cash, they automatically assume it refers to additional money – but rather when we talk surplus cash, we are talking about purpose driven pockets of savings or investments, whether for staff bonuses, a new asset or even rainy days for example. Many businesses put money away for these events, or even just to keep on hand for emergencies, but opt to put them in call accounts, allowing for immediate access. However, these accounts yield very little interest and aren’t optimised for growth.
Having a relationship with your banking partner ensures that they tailor a cash product solution that provides a balance between the benefit of a higher interest rate but, also immediate liquidity in line with the requirements of the business. In some cases, the impact of the rate a business is currently earning versus what they could be earning could be equivalent to one to two employee salaries – imagine the impact?
Being treated as an individual business and not just a customer, where there is honesty around what will work best and authenticity in every engagement – allows the business to maximise on their entrepreneurial spirit, knowing their financial partner has their best interests at heart.
However, the relationship should also go beyond this – beyond the efficiency and effective execution of business requirements. It should also be pre-emptive when it comes to risk. Fraud and cybercrime in today’s money market is, unfortunately, on a sharp increase and so, the value of a relationship with your banking partner takes on a whole new dimension – with the assurance that, given they understand the role players, the business cycles and the authority matrix, they’re able to pick up any fraudulent activity before it takes place. These preventive measures are often not talked about as part of the relationship conversation.
Such trust can only come from a relationship manager that has the skills and know-how to truly understand your business. One that listens and spends time entrenching themselves into your business by asking the right questions and pays close attention to the granular detail that makes the organisation tick.
The market is tough and business confidence and growth is low, but if there is one thing business owners can do, is find opportunity. What does become important however, is finding the right partners that allow them to leverage their skills and optimise their cash to and drive opportunity across their business.
Organisations need to have the will to truly optimise their financial position and the banking partner willing to build that relationship.
– Sean Jackson is head of Business Cash Solutions at Investec
