A world-class treasury maintains the minimum number of banking relationships necessary to meet the operating and financing needs of the company while containing the total cost of banking and borrowing. To support this objective, the treasury staff constantly evaluates banker and lender performance in comparison to service expectations, using objective and quantitative measures. Included in these evaluations are investment bankers who provide indispensable expertise in capital markets. The evaluations distinguish the superior service providers from those who may be eliminated to save costs.
The process of building lender relationships is critical to world-class companies because strong banking and lender relationships provide the company with innovative ideas for processing transactions, earning higher interest, and reducing costs; reduction in financial risks; valuable financial information and advice; and prized business contacts in unfamiliar markets. This benchmarking tool offers leading practices for building lender relationships to meet the company’s strategic financial objectives. Key evaluation areas include:
- Evaluate pricing and quality of financial services and relationships to ensure that the company is getting superior performance from its suppliers.
- Understand the valid expectations of suppliers and meet and exceed those needs that are realistic and achievable.
- Manage exposure to bank vulnerability risk and optimize the number of bank relationships.
- Periodically assess lender relationships to ensure that they support execution of the business strategy.