Key considerations when reviewing your banking arrangements

The current economic conditions are presenting challenges for New Zealand businesses of all sizes. High interest rates, severe weather events, and general market turbulence are creating an environment which is unfamiliar and intimidating for many. In times like these, it’s important to understand where your business is at and look at what you can do to feel more in control.  

One of the ways you can do this is by reviewing your banking arrangements. If you’re not sure where to start, here are some key things to consider: 

Products and structure: Are your needs being met? 

It may have been a while since you’ve reviewed your bank accounts or loans, and in that time your needs may well have evolved. Different products come with varying fees and costs, which makes it crucial to assess whether they are still the right fit for your business.  

You may also want to evaluate how these accounts and loans are connected to your business, trust, or personal finances, and whether they’re structured in the most advantageous way. When you understand what secures your lending, you can investigate whether alternative options could reduce risk and/or interest. Your BDO adviser can take a closer look at your bank structure, lending facilities, and product suite to offer an independent opinion on your setup, giving you peace of mind.  

Refinancing and sourcing new debt 

If you’re contemplating refinancing, consider engaging a trusted adviser to compare rates and solutions across different lenders. This is also helpful if you’re seeking new debt for a business expansion, asset purchase, or any other project. Your adviser can guide you on what information you’ll need to provide and help you communicate effectively to put your best foot forward and achieve your desired outcome.  

For example, do you need a new forecast or is last year’s enough? And do you have the relevant financial reports ready to support your application? By being prepared and having all the necessary paperwork ready, you’ll be in a much better position to ascertain your lending capacity, submit your request, and navigate any proposition when it comes in. At BDO, our team can help to guide you on this preparation and ensure you understand every step of the process. 

Many businesses want to know what their debt capacity/maximum borrowing potential is. This all depends on what they’re buying and how that purchase impacts their bottom line. Your adviser can walk you through this to make sure you’re asking the right questions and have all the necessary information to hand.  

Maximising your existing cash assets 

Not every business is in a position of debt. If you have cash assets, investigate whether you’re getting the most out of them. This includes looking at the interest you’re earning on any investments and considering whether you could be getting more from your money. 

Interest rates: To fix or not? 

Deciding whether to fix or float your interest rates – and how to go about it – can be tricky. While there’s no one-size-fits-all solution, your choices should align with your business plans, risk comfort levels and profile, and plans for the future. Your adviser can help to guide you on this and demystify the jargon that can sometimes be associated with this space. 

Compliance and keeping your bank up to date 

Make sure your profile is accurately established and verified at your bank to help streamline processes and improve efficiency. It’s important to not only meet the bank’s requirements but also to keep them informed of any changes.  

Some lenders require regular reporting to demonstrate positive account conduct and financial health, so keep on top of your bookkeeping to generate financial reports in a timely manner. This not only meets banking requirements but also can help to advance requests for new lending. It’s better to have this information in advance than scramble to come up with in when asked. 

Reach out to your adviser 

Reviewing your banking arrangements can provide peace of mind during uncertain times. At BDO New Zealand, we can provide independent guidance to help you review your arrangements and communicate on your banking needs in a way that’s clear and efficient.  
Learn more about how our Advisory team can help you here