“Financial communication” – many SMEs see it primarily as a task of listed companies. But it is of great importance, especially for small and medium-sized enterprises. Especially when a company is in a difficult economic situation. Companies that proactively implement transparent bank communication and thus build up a good relationship with their bank (creditor relationship) have a much better standing with their bank. Targeted financial communication with regular reporting improves capital access and conditions. It strengthens the bank’s confidence in its own company and can pave the way for better support overall.

Act, don’t react

A common principle in the everyday life of SMEs: If the company is doing well, the bank hears from the company regularly. If the company is not doing well, radio silence prevails. This makes the bank suspicious and undermines the trust that has already been built up. For banks, hearing nothing from the company is a rather alarming sign. For as the saying goes: “Banks can handle risks, but no surprises”. No bank wants to have to “pull the cart out of the mud” afterwards. Forward-looking and, above all, quick action is crucial.

A reporting cycle can be established as a basis for bank reporting when loans are granted. This defines the frequency and scope of the information. In an economically difficult situation, transparency and honest communication with financiers create an important time advantage, so that the reporting cycle must be abandoned. A confident demeanour on the part of the entrepreneur, who keeps a firm grip on the reins even in a difficult situation, also underlines his suitability and reduces any doubts on the part of the bank as to whether the management is capable of successfully mastering the crisis. The chances of support in the crisis are increased by active, transparent bank communication, as the bank is much better able to assess and manage the risk.

Not only financial matters

Maintaining transparency in every phase of the company means communicating openly with the banks in accordance with the agreements – even, or especially, during a crisis. This means that facts are published regularly. But not only the figures are interesting, but also the “soft facts”. These include a high-performance team, a stable network or a good position with clients. These are only examples. In banking communication, the “overall package” is convincing. If the company’s competencies, strengths and performance are clearly communicated, this can be a decisive factor in bank decisions.

Financial Communication in Practice

The most important form of bank communication is the annual financial statement. Here there is the possibility to provide the bank with the annual financial statement digitally via an interface. The digital financial report (DiFin) is a digital standard with which the German banking industry offers companies an up-to-date procedure for the electronic transmission of annual financial statements and income statements without media discontinuity. Key financial figures, risk reports, business prospects – how comprehensively the company provides information also depends on the individual structures and processes. Digital tools and automated processes ensure transparency and professionalism, and relevant, up-to-date information can be accessed at any time.

The Basics of Banking Communication

  • Structured information & open communication
  • Agreement with the lending bank on reporting cycles
  • Keeping the reins in your hand: Don’t react – act! Do not rush into every detail but provide relevant information in a timely manner. Report on particularly important milestones and positive perspectives.
  • No scaremongering, no whitewashing: remain objective and honest.
  • Punctual preparation of annual financial statements and up-to-date financial accounting are an important basis for trustworthy and credible communication.
  • In a crisis: Observe legal communication obligations for management and the board of directors
  • Communicate not only financial facts, but also soft facts

The financial experts of THE MAK`ED TEAM build the necessary basis for transparent financial communication for medium-sized companies with a professional and individual controlling scope. We implement relevant structures and processes to ensure continuous and active financial communication in addition to providing information to management. The scope of bank reporting depends on the extent of the credit relationship with the respective banks and the agreements made with the banks. The resulting reliability vis-à-vis the banks is a matter of course that the company should show to its lenders.

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