Banks form part of the business associates platform and their main function is to offer financial support and services to business organizations. During the process of business operations, banks interact with the entrepreneurial entities in various ways some of which are granting loans for business growth, necessitating transactions through money transfers and offering financial advice to the clients. Indeed, a constant interrelation needs to be nurtured in the most complaisant manner possible.
With the many financial institutions, it must be admitted that choosing the right bank is not an easy task. It requires a critical examination of the goals and objectives of the company in regard to financial stability, and on the other hand, the ability of the financial institution to offer the much-needed support. For a company to choose a suitable bank, it should consider the viability of the financier, the kind of supportive services that the bank offers to the business clientele including advisory on future borrowing, and the flexibility in terms of agreements.
The company should critically establish how the bank has been performing, how the other companies commend on its services and if there are any disputes with other business organizations and how they were resolved. It should be noted that most banks will not disclose any information that they feel may taint their image. Perhaps details on disputes with clients may only be obtained from other sources including the business journals, courts of law and the media highlights and archives.
There are numerous dimensions on which to categorize a bank as suitable to indulge in business with. First, the financial institution should have a record track in offering good services. The period in which it has been in business should clearly signal its performance mileage. Entering into contract with a bank that has no known performance background can be quite technical.
It is not certain whether the institution will be able to offer the necessary support when things go haywire. For example, during a recession, an unstable bank may be faced with operations setbacks that may hinder a company from seeking any financial help to back up its monetary resource. This is the time financial institutions should show commitment and demonstrate their ability to support businesses.
Secondly, other aspects need to be evaluated, for example, the terms of agreements when applying for loans. The financiers may be so stringent that being unable to repay loans can prompt a further unprecedented course of action such as unjustifiably taking up collateral that have been placed as security for loans. Although this may be in the interest of the lenders to protect and safeguard their business, but on the other hand, there should be a consensus on how to best resolve such a an eventuality.
The interests of the two parties (bank and the company) should be taken into considerations on a win-win situation. The financial institutions should have good advisory frameworks that assist businesses to financially manage their monetary resources. It should advise the businesses on the right time to borrow and how to appropriately obtain manageable loans.
Financial companies that are out to unscrupulously exploit the companies without considering their financial uncertainties can lead businesses to plunge in financial pit-holes. The terms of agreements are one of the most important of the conditions in borrowing. The financiers should be able to offer in-depth pre-loan information to the company. There are times when banks, out of fear of being branded as unreliable, tend to hold vital information regarding lending agreements.
For example, banks may hide particular information to its clients such as the so-called 'hidden charges’. This implies that the companies only come to know of such terms when they have already entered into a loan contract with a bank. This is quite pathetic and creates misunderstanding and lack of confidence with the institution. This can adversely affect the company's financial goals and objectives.
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