Banks provide more than funds to businesses
- Banks are notorious for dealing with money and it does not occur to many entrepreneurs that they can obtain advisory services, often free of charge.
- In most cases, uninformed entrepreneurs borrow money to finance their business when they need something like a letter of credit from a bank or advice on managing cash flow for the business. growth.
Recently I read an insightful article in which Elizabeth Wasunna, Director of Corporate Banking Services at Absa Bank, highlighted some of the funding mistakes made by clients.
What caught my attention was the claim that “often customers think financing is the only support they can get from a bank, but most of the time we have to start the conversation about a non-financial basis. ”
This is the absolute truth. If you tell people you are in a bank, what comes to their mind is that you are making a financial transaction or negotiating cash loans.
Banks are notorious for dealing with money and it does not occur to many entrepreneurs that they can obtain advisory services, often free of charge.
In most cases, uninformed entrepreneurs borrow money to finance their business when they need something like a letter of credit from a bank or advice on managing cash flow for the business. growth.
A letter of credit is a commitment from a bank that guarantees that full payment from a buyer to a seller will be paid on time. In the event that the buyer is unable to make payment on the purchase, the bank is obligated to make full payment or the remaining amount of the purchase.
Most local and foreign suppliers are at home with a letter of credit. A letter of credit is not a loan. No cash is drawn from the bank. It costs a minimal fee to the business and much less than interest on a loan.
In short, banking and financing are just a few of the many services offered by banks.
In addition to the financial advisers that can be accessed every day, banks have business clubs that offer specific non-financial services to professional clients who subscribe.
They include seminars on key issues related to business success, tax compliance, proper business registration, bookkeeping, educational programs that help SMEs acquire essential management skills, and corporate travel. business to create business opportunities and exposure.
In addition, they provide a platform for networking, coaching and business mentoring by bringing together different entrepreneurs.
They also advise clients on investment opportunities both locally and abroad, on how to optimize their resources and on alternatives for financing business growth. They advise clients how to grow their business at a speed they can control and avoid the risk of biting more than they can chew.
Most banks have gone a step further in providing their business clients with self-care and personal development skills for their overall health – mentally and financially.
This was well demonstrated during the time of Covid-19 which upset businesses and the way of life. For example, Absa Bank offers free webinars for SMEs on how to get your business online, take care of yourself and take care of the mental health of business owners and employees and, more importantly , on leadership during a crisis.
Basically, if your bank doesn’t offer you these non-financial services and more, then you are in the wrong bank. But chances are your bank will offer them for free or at minimal cost; it is you who do not take them because you do not know about them.
Mr. Kiunga is a business trainer and author of The Art of Entrepreneurship: Strategies to Success in a Competitive Market.