I read with great interest Melanie Stern’s note in the November issue of Financial Director on the worrying trend towards FDs having to educate their bank managers about the basics of their balance sheet. I know Melanie based this on a rather animated discussion that emerged from a session on banking relationships at this year’s Financial Director Summit, which our managing principal for the southeast of England, Maurice O’ Shea, was fortunate to attend. She had, rightly, been struck by how many FDs in the meeting had spent rather a lot of time walking their banking partners through their accounts, explaining the very most basic elements of the balance sheet (and probably saving the bank thousands of pounds in training fees- not to mention blushes).
It is something Maurice and I have definitely seen more of among the FDs we work with. And it could be considered rather tiresome. But as Melanie pointed out, it could also be an opportunity: and it is something we’ve been hearing that our part-time FDs are helping less experienced finance heads make the best of.
“It can help your lenders get a more detailed picture of your business; it creates trust; and, since those in the banking community talk to one another, it delivers a valuable marketing message of your own expertise – something they can put faith in and distribute around the community,” Melanie said in her piece.
What that means, in our current experience, is that FDs who see taking the extra time to do that as valuable will put themselves in a position for a bit of quid pro quo at a time when (particularly state-owned) banks are putting existing business under more pressure in lieu of finding more new business. FDs of strong and growing companies need to be pressing their advantage more persistently than ever – not being pushed into a corner by their banking providers who have their targets front and centre of mind. We are in the business of providing FDs as mentors to incumbent FDs at growing businesses who may be in their first FD role and, though it will hold them in wonderful stead for that FTSE job in another decade’s time, are being thrown right among the lions at a time in the economic cycle when the business-bank relationship is at its most precarious.
So what we say is, hold fire on the eye rolling when your banking guy seems to not be grasping what it is your business does or why the numbers you’ve sweated over don’t seem to be exciting him. It may be simply that he just doesn’t get it. Play the teacher and you’ll find in time that one of the most critical relationships an FD has can be worked to your advantage – and a lasting advantage.
Sara Daw is managing director of The FD Centre, the UK provider of part-time FDs for those SMEs and growing, entrepreneurial businesses across the UK who don’t want, don’t need or can’t afford a full time FD.
A range of FDs from the FD Centre’s regional operations will write our blog for FDs and growing, entrepreneurial businesses, “The Entrepreneur’s FD“, on the last week of every month here at Extraordinary Items
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