Bringing country clients closer to their banks
Practical tips for accountants to foster a positive relationship between rural clients and their banks.
- Many agribusiness clients count their bank as their most vital business partner and CAs can play a strong role in this relationship.
- A key aspect of any CA’s role lies in understanding the specific requirements of the individual bank and how they apply to your client’s situation.
- Managing the ongoing client/bank relationship requires timely and proactive open communication.
Many agribusiness clients count their bank as their most vital business partner. In New Zealand, where agriculture is a key industry and where primary sector exports are set to rise almost 10% in 2018 (Situation and Outlook for Primary Industries), the agribusiness/bank relationship is very important.
With the gross value of Australian farm production forecast to fall almost 9% in 2017–18, according to the Australian Bureau of Agricultural and Resource Economics and Sciences, many agribusiness clients may need to rely on their banks even more in the coming months.
So how can chartered accountants help promote a positive working relationship between a client and their bank? Bruce Debenham FCA, Director at Perks, says: “CAs have a significant role to play in fostering the client/bank relationship. It’s a CA’s job to make the banking process as seamless as possible and to remove any stumbling blocks for your client.”
Rural Insight series: Managing the banking relationship
As part of the Rural Insight series, Bruce Debenham FCA, Jonathan Forrest FCA, and Brad Higgins provide guidance on how to maintain a good working relationship with a bank on behalf of your clients.
The first challenge for any CA is to understand the bank’s processes as these can differ between banks.
CAs may be responsible for supplying the bank with the following information regarding clients: a structure diagram of the business; a Statement of Financial Position; monthly/quarterly management accounts; annual financial statements and tax returns; aged creditors and debtors; financial forecasts, including production schedules (such as crop and livestock budgets); profit and loss records; cash flow and balance sheets with supporting documents; relevant benchmarking data; and an outline of the current and/or requested funding requirements.
Talk to the bank
The best way to understand what’s required in your client’s individual situation is to deal with your client’s banker directly. “Remember that you’ll need your client’s consent to contact their bank on their behalf.”
The second step, Debenham explains, is managing the relationship. “It’s your responsibility as your client’s CA to provide any information the bank requires to assess and manage the client/bank relationship over time,” he says.
The main thing to note here, he points out, is that reporting should be “regular and ongoing” so that the bank receives a regular full and timely picture of your client’s business.
Related: Resources for CAs working in regional and rural areas
The CA ANZ Rural Insight series includes a selection of guides for members working in rural areas, all written by members themselves. These practical Rural Insight papers tackle many of the challenges commonly faced by CAs based in rural and regional areas.
“CAs must be proactive in supplying information to the bank on their client’s behalf rather than just reacting to bank requests.” This is particularly true for more complicated transactions. Here, early dialogue is essential.
“Also, when it comes to communicating with key decision makers at the bank, such as credit assessors, you should try to keep the communication chain as short as possible to remove the risk of ‘Chinese whispers’.”
Sharing bad news
Then there is the issue of bad – or potentially bad – news. Debenham advocates contacting the bank about any potential problems before they arise, or at least before they become bigger problems.
“Don’t delay bad news,” he says. “It pays to be open and upfront in all your communications with the bank, especially in regard to possible problems. Ultimately, the bank will find out anyway, and it’s much better if any problems are raised early, and if they’re raised by you.”
“But by the same token, you don’t want to flood the bank with information that is irrelevant or unhelpful, so be mindful that the details you provide to the bank are relevant to the request being made.”
Related: Public Practice Program
The Public Practice Program is a prerequisite to the Certificate of Public Practice for progressing a career in practice management. This uniquely interactive and flexible learning experience is delivered via eLearning and a two-day workshop. Refresh your skills or equip your successor with a mix of technical and practical skills to put their best foot forward.
Related: National Primary Sector Conference New Zealand
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