Who are your best customers? Are they the people who do business with you on a regular basis? Do they have their paperwork up to date and pay on time, or early? Are they easy to deal with and always polite to you and your counter people?
Just like you, your bank is a business. And just like you, it wants to support its best customers. Nowadays, a good relationship with your bank is one of the most important factors promoting the health of your rental business.
So, “Are you one of your bank’s best customers?” If you have a hard time answering that question, then you have some other questions to answer.
Do you have up-to-date financials? With the easy availability of off-the-shelf accounting programs such as QuickBooks, Peachtree, MAS90, Great Plains or Sage, company financial reports are available at the click of a button. Both Bluebird and TSD provide easy-to-use interfaces to these and other standard accounting programs.
(Angelia Margolit of Bluebird says that once you balance your daily business report or DBR, Bluebird’s software automatically creates journal entries for your chart of accounts, providing you have accounting software that can accept external data.)
In this day and age, if your bank or finance company calls and asks for a copy of last quarter’s financial reports and you tell them it will take a couple of weeks, you’ve raised a red flag. With the right software you have no excuses— you can be current everyday.
Underwriters also look at credit scores, so make sure your Dunn & Bradstreet ratings and FICO score are up to date. Also, make sure you have letters in your credit file to explain any past discrepancies.
Do you know what you want from your bank? Do you have a plan?
Has a corporate customer ever said he wanted 50 cars by Friday? It would have been easier if he gave this request three months ago. Your bank is no different. You need to put together a fleet plan for the next 12–24 months.
Remember it is just a plan; it is not etched in stone. However, it should show your bank at what point you’ll need to add cars to the fleet and when you plan to sell or send them back. Can you show your bank how you’d handle a 20 percent decrease in sales? Be prepared.
A simple spreadsheet with a list of vehicle types on one axis and the 12 months of the year on another will help you approximate your funding needs.
Every so often, manufacturers will offer a special discounted price on fleet units for a short time period. Make sure your credit line has enough flexibility to take advantage of these opportunity buys.
What else do you want from your bank? Do you want direct deposits for your employees, corporate credit cards, discounted credit card processing fees, interest bearing business accounts or reduced or no fees on wires and other transactions? Does your bank offer a special loan program for people buying your risk units? If you don’t know, you can’t ask.
Do you know your bank’s current policies? With the changing landscape in the financial industry, banking policies can change weekly. For example, the Fed can issue new requirements as banks buy banks, fold or get taken over, which changes their loan policies.
At Eckhaus, we have a rental customer who was with a bank for more than 20 years. The bank was bought and the customer had to reapply for a credit line under the new bank’s policies. After several weeks and lots of paperwork the client was approved, only to have the new bank bought by an even bigger bank. (Luckily the company had up-to-date financials, or it would have taken even longer.)
At that point the client had to start over with a new bank and more paperwork, while the client had to pay for the cars—not good! We worked with our customer, the bank and the supplier to make everyone happy.
You need to check with the bank on a regular basis about any changes in policy and loan requirements. If you receive a policy change in the mail, read it. If you have a question, call. If you don’t like the change, call.
Does your bank know who you are and what you do?
At one time, banking was a personal business. The banks were local and bankers knew their customers. While decisions were based on sound financial principles, an individual’s hard work and standing in the community counted. Now decisions are often made by computers located thousands of miles from a bank. Still, fostering a personal relationship can open doors normally closed.
You would be surprised how little bankers know about how their customers make money.
When they look at a rental car company, what do they see—a giant mobile liability that is losing value on a daily basis, or a cash-generating machine?
You need to educate them. For example, when you tell them you are buying repurchase/buyback cars, do they really know what that means? Do they understand that their risk is really the monthly depreciation times the minimum term? We’ve heard firsthand that banks require their loan officers to submit a report every time they speak with or visit a customer. They want to make sure the customer has a handle on the business and that it is healthy.
Show your bank that you really understand your business. Offer to take your banker and his or her boss to lunch. Ask if there is anything you could do to make their job easier. Invite them to your office to meet your team. And don’t forget to always send them your updated financials at the end of every quarter.