Dealing with your banker in a downturn: Be proactive says PwC

    TORONTO, Feb. 19 /CNW/ - While the economic downturn is forcing private
companies to address their financing needs, many are shying away from
proactively communicating with their banker for fear that they may be squeezed
by the credit crunch. At a time when private companies should be in regular,
constant communication with their banker, according to new data from a Pulse
survey of private companies conducted by PricewaterhouseCoopers (PwC) in
Canada, only 39% of respondents have increased communication with their banker
in the past three months. However, dealing with your banker - even in this
economy - is not something to be feared.
    "While banks always need to be cautious, it is in their best interest to
see the companies they deal with succeed," says Vince De Luca, managing
director in PwC's Corporate Finance Practice. "Business owners who can
demonstrate to their bankers that they are forthcoming and proactive - and
have strategic plans to see their business succeed - will be more likely to
receive help and secure financing."
    To help private companies ensure financial solvency for their business,
De Luca offers the following tips on dealing with your banker.

    -   Stay in touch. If you're not performing well, let your bank know and
        explain what measures and actions you've implemented to address the
        issues. According to the Pulse survey over one-third (37%) of
        respondents only communicate with their banker on an annual or
        quarterly basis. Even if your business is performing well, talk to
        your bank relationship manager at least twice a month and keep them
        apprised of your situation.

    -   Do your homework. During a credit crunch and an economic downturn,
        extensive forecasting is highly recommended. Private companies should
        perform detailed six, 12 and even 24-month forecasting, looking at
        various worst-case scenarios and preparing strategies for dealing
        with each one. Only 60% of private companies surveyed perform
        forecasts, and of those who do perform forecasts, only 56% share them
        with their bankers. It is crucial to share these plans with your
        financial advisors to help gain and/or increase their confidence in
        your company, and don't be reluctant to ask them for help.

    -   Be open and candid. Unlike public companies that disclose detailed
        reporting and strategy on a quarterly basis and discuss it with
        financial analysts, private companies tend to be very private. In
        today's climate it's vital that you are as candid and forthcoming as
        possible with your banker.

    -   Communicate your new focus. Bankers expect to see that management
        teams have shifted from a sales growth orientated focus to a capital
        preservation mode. "We have seen numerous examples recently where the
        subject companies did not adjust their production and purchasing
        behaviours despite the fact that sales were significantly decreasing.
        These actions, or lack thereof, resulted in drastic increases in
        working capital and covenant breaches," says De Luca.

    The full article can be found in the "Let's Talk About" section at This series of articles from PwC's Private
Company Services group helps business owners think about topical issues and
opportunities that can affect the performance of their business.
    For more information on managing in a downturn, visit

    PricewaterhouseCoopers ( provides industry-focused assurance,
tax and advisory services to build public trust and enhance value for its
clients and their stakeholders. More than 155,000 people in 153 countries
across our network share their thinking, experience and solutions to develop
fresh perspectives and practical advice. In Canada, PricewaterhouseCoopers LLP
( and its related entities have more than 5,200 partners and
staff in offices across the country.
    "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP, an Ontario
limited liability partnership, or, as the context requires, the
PricewaterhouseCoopers global network or other member firms of the network,
each of which is a separate and independent legal entity.

For further information:

For further information: Nina Godard, PricewaterhouseCoopers LLP, (416)
941-8383 ext. 13520,; Carolyn Forest,
PricewaterhouseCoopers LLP, (416) 814-5730,

Organization Profile


More on this organization

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890