Financial Preparedness for Businesses

Warm relationships are fundamental in day-to-day business -- In disaster, they are vital.  Nowhere do relationships count more than between business owners and their bankers. 

It is not enough to have a business checking, reserve account and even a loan, if you are merely an account number to your banker.

Imagine a disaster of such impact that it damages your business structure, assets, equipment, computers, vital and software.  Fortunately, no one is injured.

Accounts receivable individuals and companies hear about the disaster effecting you and decide to hold back on their payments to you – until they know you are going to get back-up and running.  Payroll is just days away.  You suspect your accounts payable accounts will likely expect payment on-time.  Heavy financial stress. 

What Plan have you in place to meet such a scenario?  Will your business be one that is able to respond effectively and recover enough in the short-term to get back to business? 

Will the executives of your financial institution know who you are without computer access to your accounts? 

If you need a loan quickly to meet essential expenses, are they likely to step forward and provide the funds you need? 

Does your bank or credit union have other branches?  Is your bank owned by a corporation that is financially strong?  Can they take a disaster hit and still survive to be there for you? 

Do you have Business Interruption Insurance?  Are you confident of what it covers and does not?

Do you carry earthquake and flood insurance?

Here are some tips in dealing with your financial institution:

1. If you are not on a first name basis with your banker, go into your bank or credit union tomorrow and make yourself known to them.  Inform them of the services they provide to you, family and business. Drop in to say hello to the manager and other executives from time-to-time.  You are building a warm relationship with the decision makers.  If they are doing their job, they will know you by name after a few visits. 

2. Ask: “In the event of a major disaster, with computers down, how will you be able to respond to my immediate financial needs?” 

3. Ask: “If a disaster strikes you at this banking location, do you have an integrated relationship with branches or sister institutions located out of this area?” 

4. Ask: “I have business interruption insurance, as well as earthquake and flood insurance.  I don’t know how long it will take to have my claims processed nor the amount they will pay toward my needs.  I’ll also have deductibles due?  Will you be able to help me in such circumstances?” 

If you are not assured on the points above, from your contact with your financial institution management you might consider doing business elsewhere.