Banks, essential partners, support entrepreneurs in the development of their business and in the essential stages of their private and professional life. But it often happens that because of lack of knowledge, entrepreneurs do not negotiate their bank fees and therefore restrict their cash flow. How to optimize your banking negotiation?
Why don’t SMEs negotiate their bank fees?
Without access to corporate banking benchmarks, SMEs are often forced to conduct “blind” negotiations with their banker. Due to a lack of expertise and comparison tools, companies do not have all the information they need to negotiate properly. Large companies generally negotiate their bank fees every 2 or 3 years. This block consultation effect, rather than a one-off negotiation focused on specific costs, is very effective: it can reduce bank costs by more than 20%!
How to reduce their bank charges?
The priority is to carefully analyze the company’s “bank costs” item. It is already necessary to list all the banking services consumed and their costs. Then it is a question of auditing the consumption habits of these banking services, both in volume and quantity, collecting information and typographing the use of services.
Then it is still useful to compare the banking costs of your company with those of a company with a comparable financial health. If the manager does not use a specialized company, he can talk to his colleagues, especially in some entrepreneurial clubs or within the framework of social networks.
Finally, it is necessary to go to the banks, submit to them the company’s inventory of fixtures for the past year as well as the forecasts for the coming year and ask for pricing proposals.
On which points is it possible to negotiate?
In the bank, there are sometimes charges that are purely psychological and have nothing to do with the true price of the service. To get an idea of what can be negotiated, it is still useful to know that prices can generally be lowered on services that are not manually traded. So in order to negotiate properly, it is already necessary to have a good knowledge of the banking sector and to be interested in the comparators within everyone’s reach. Banks compete with each other.
Advice for entrepreneurs who are new to the world of banking negotiation?
Before launching, as far as possible, try to have comfortable equity capital, by collecting love money, from business Angels or assistance such as Oséo, bpifrance or active France, in sufficient volume to inspire confidence in a bank.
To optimize your banking negotiations it is essential to maintain good relations with your bank. For this to happen, the banker must:
- can permanently judge that risk taking is controlled by the company.
- sees the potential that your company represents in terms of increasing its own sales turnover.
At the same time, the entrepreneur must always make a transparent and clear statement about the situation of his company. You don’t have to lie to your banker because he’ll find out very soon! Today, algorithms analyze the least amount of data in your bank accounts. Communicate with your banker at least quarterly, and regularly review the situation in relation to the business plan. Once this climate of trust has been established, the conditions for optimal negotiation are assured.