The right deposits

In business, when we think of making a deposit, we picture getting checks from customers, listing them on a deposit slip, taking them to the bank, and having the money added to our business checking account.  Without question, those deposits are the lifeblood of our business, providing money from which we pay our fuel, employees, insurance, vehicle and business loan payments.  But are those the only deposits you should be making at your bank?

A bank is usually the largest source of financing for a business, so having a strong relationship with your bank is important.  Consider it the very heart of your cash flow.  And it’s not only the money deposits that keep this heart pumping.  Your banker is the one person who may be able to  help you with your business finances when the going gets tough.  This can include anything from a short-term loan to help after the loss of an important customer to a line of credit when a sudden major repair is necessary. 

That banker can also help during times of growth when you need extra operating funds.   To ensure the banker is willing to work with you, there are non-cash deposits you need to make first, i.e., paperwork that completes the financial picture of your company.

Many bankers have told me the carriers that get the loans are the ones that are proactive in providing the financial details of their trucking operation.  The owners/managers put the information in the hands of their banker before he or she has even asked for it.  By federal law, a bank is required to maintain specific financial information on each customer with whom the bank has loans.  If that documentation isn’t available when a federal regulator makes an inspection, it creates a problem for that banker, which then becomes a problem for you when you want a loan.

Following is a list of the documents you need to be depositing with your banker:

• Annual financial statements
• Annual balance sheets
• Annual income tax returns  
• Any changes in management succession  
• Quarterly aging of accounts receivable and accounts payable
• List of inventory
• List of owned vehicles and equipment (must be updated any time there is a change)  
• List of vehicles and equipment leased (must be updated any time there is a change)  
• Customer concentration (percentage each customer represents as to overall revenue)

Think in terms of what documents and information are going to present the most complete financial picture of your trucking operation.  The more transparent you are with your banker, the fewer headaches you will create for him with federal regulators—and the more that banker can help your motor carrier thrive and grow.

Contact Tim Brady at 731-749-8567 or at www.timothybrady.com