As the year winds down, CFOs are often focused on closing out the current year successfully, preparing the budget for next year, and perhaps preparing for year-end reporting and audits. Financial executives should also know that the fourth quarter is an opportune time to revisit the use of their company’s current suite of banking services.
During the fourth quarter, most banks announce annual pricing updates to their business banking services–particularly treasury services. Most financial institutions quietly place a notice in their fourth quarter account analysis statements that state changes will be effective January 1st of the coming year.
Yet, most clients are not aware of a bank’s pricing changes and few bank clients are provided specific directions on how the pricing updates will impact their organization. A client who is unaware of pricing updates could be subject to a 5-7% fee increase and not even realize it.
In order to stay ahead of the curve, CFOs should practice bank relationship management by meeting with their banking institution at least once a year and developing a regular line of communication. In doing so, a CFO develops trust with their banker, which contributes to a more financially beneficial situation for all parties involved.
Annual Reviews Can Foster Active Bank Relationship Management
Executives should hold a year-end review with their bank representative to discuss any upcoming changes to their services and pricing.
Executives should look for information regarding pricing updates in their bank’s fourth quarter account analysis statements and ask their representative to detail exactly how pricing updates will impact the current services and fees. For example, if a company processes 50,000 checks on a monthly basis, even a 0.01€ fee increase on check processing services could result in paying an additional 6,000€ per year.
Meeting with a bank representative allows a financial executive to negotiate favorable terms on any pending fee increases, such as settling a 5% increase down to a 3% increase, deferring the increase for a few months or using alternative services that may have a lower cost structure. A third party also could step in and effectively negotiate better banking service terms on behalf of an executive.
A year-end review also can be an opportunity to determine exactly what services are most beneficial to a company. A bank representative can go through each line item to explain each service and how it is being executed on the company’s behalf. This allows the banker and the client to determine if this service is a necessity or if alternative (possibly more affordable) service would suffice and streamline services ahead of the new year.
A company’s bank can be its strongest ally—or its greatest enemy. When an executive invests the time to build a solid working relationship with a banking institution, a company’s needs will be better managed going forward.