Nomizon Associates
Business Advisors
Meeting the bank manager
Inside information
Many bank managers are under pressure to increase bank income or to reduce the bank’s loan book. Your
business may now need more access to its overdraft facilities and any additional costs, including from the
bank are also unwelcome. If you don’t prepare well for meeting the bank manger you may be in for a
surprise. Talk to your accountants, they are constantly dealing with the local banks and should have an up to
date understanding of the stance likely to be taken by your bank manager.
Understand your numbers
Bank managers like transparency and businesses that are clearly in control of their finances. If they don’t
understand your business or the numbers they will find it difficult to support your business with their credit
committees. For example, if sales are behind, is this due to the loss of one customer or is it a general trend.
How has the business adjusted its cost base to lower sales?
Prepare a full set of management accounts, including profit and loss, balance sheet and cash flows.
Calculate variances against budget and the prior year so that you understand the trends. You should be able
to explain the business story behind the numbers.
Debtors
The bank manager will be interested in any amounts that are well past due in your debtors ageing report,
especially if they are material, as well as any customers who exhibit signs of impending financial difficulties.
Conduct a credit review meeting prior to meeting the bank manager so that you have up to date information
on unpaid debts and any action that needs to be taken.
Facility letter
The overdraft facility letter is an important document. Ensure you are familiar with all of its terms, including
any covenants. If you have underutilised your facility in the recent past, the bank manager may seek to
reduce it unless you can demonstrate that you will need access to that level of funding in the future.
The bank manager could also suggest tightening the covenants. This gives the bank has more opportunity
to withdraw the facility later as the covenants will be easier to breach, although he will not say this. Review
your performance against the covenants, actual and projected and model the tolerance levels you are
operating with.
The bank manager may attempt to impose increased bank charges for providing the facility or in the event of
breaches of covenant. Be well prepared for the meeting and you will have more negotiating room.
For further information please contact me by email at johntoppin@nomizon.co.uk or on 07834 380290.
© John Toppin 2009
The right of John Toppin to be identified as the author of this work has been asserted by him in accordance
with the Copyright, Designs and Patents Act 1988.
John Toppin MA FCA, Nomizon Associates, The Old Rectory, Sutton Road, Langley, Kent, ME17 3LY.
44(0)7834 380290 johntoppin@nomizon.co.uk www.nomizon.co.uk