In the current economic environment, having a solid relationship with your banker is critical. This week at World Dairy Expo, Arthur Moessner, Vice President – Dairy Team Lead, American AgCredit gave farmers some tips to improve their rapport with their banker, and also some pitfalls to avoid.
Here are six ways to ruin your relationship with your banker, according to Moessner.
- Limit communication. “Your banker has to know what is going on at your dairy,” he says. “If your banker knows what challenges could lie ahead, they will be better able to help you work through them.
- Supply financial information late. “When a banker asks for financial info, it’s important to get it to them on time,” he says.
- Volatile financial ratios or collateral advance requirements. “Lenders like predictability,” he says.
- Draw excessive amounts of money from the business. Your banker doesn’t want to see you drawing more money from the business than your balance sheet can support.
- Borrow significant funds outside the business without telling your banker. Moesner says your lender needs to know about all of the loans you have at any given time.
- Make significant capital expenditures without telling your banker. Again, communicating with your banker is key, Moessner says.