CHAPTER 5 Managing Bank Relationships
This chapter covers these topics:
- Analysis of current trends in banking relationship management.
- Mobilization of cash in a multibank network.
- General terms of credit agreements.
- Specific issues of importance in arrangements for credit.
- Ongoing bank relationship concerns.
CHAPTERS 2 AND 3 DISCUSSED considerations relating to cash and credit. Those working capital concerns are closely aligned with decisions about banking—which financial institution to use, how to make the selection, how to determine if your prices and services are what your business needs, and how to manage the relationship with your banker. We'll review those issues in this chapter.
THE CHANGING FINANCIAL LANDSCAPE
At some point in a company's history, a bank account was opened that began either a happy or a troubled relationship. A predecessor in the company's finance group may have walked over to the closest bank office, or knew someone from high school who was working at a bank, or asked a friend, relative, or associate for a recommendation. Those days are over; changes in the regulation of financial institutions have completely altered the competitive landscape and, as a result, how a bank treats its customers.
Financial Deregulation
There were prohibitions on interstate banking in the United States from the 1920s until the mid-1990s.1 Congress also imposed strict limitations on the business activities of banks, with the most restrictive being the forced separation ...