You’re establishing a new banking relationship and probably in the course of it you have to give them a financial forecast going out a few years. Bankers have been around enough to know though that things will change from the forecast.

In many cases, there are judgment calls that have to be made along the course of the loan that could mean some modification in the terms. For example, maybe income doesn’t climb as quickly as you though and so as a result maybe some net worth covenants may need to be revised perhaps to give you a little more time to get to higher levels in your tangible net worth.

So the banker can expect some things to go off course from the plans during the course of the relationship. That doesn’t mean, however, that they need to be a surprised. Rather than waiting and perhaps hoping that some things would turn around and you might never have to bring it up, you might consider an alternate course. Instead the course is to keep the banker in the loop.

There are a lot of advantages to doing so. One is that the banker’s going to react better to it if they had some inclining of how things were doing rather than being blindsided by a surprise. They have their people to talk to who are monitoring the progress of your company as well. They don’t look good if they’ve been keeping a glowing report on your company and then suddenly have to back peddle from that on short notice.

Second, the banker might be able to come up with some solutions to help you fix the problem. For example, maybe you’re facing a build up in inventory of receivables and it could be putting you into a temporary cash squeeze, the banker perhaps might have some suggestions on how to get yourself a little bit more line of credit availability. Or, perhaps, you had a slow down or not as much sales growth as you anticipated. Perhaps, the banker might have some potential customers as prospects to refer to you.

Third is that if the banker’s caught by surprise on something they’re probably going to really start suspecting some other surprises. Usually, when there’s smoke, there’s fire and you’re going to be on a much shorter leash and much more on their radar if you catch them by surprise.

So it’s much better to have a positive relationship with the banker and have ongoing discussions with them at least once a quarter in good times and not so good times. That helps the banker play more on your team, helps them be better informed and let them be more creative in ways to help you out in any challenging situation that could come up.