Cash-management accounts, which invest excess funds overnight, generate interest income while keeping the balance free for use in the business. While the interest rate paid varies daily, the fee is usually fixed. When interest rates decline, the earnings may not cover the fee. For a Rainy Day Managers and businesses will want to create a banking umbrella that will be available in the rainy season. The key will be an open line of communication and a history of supplying reliable information.
Bankers love consistency and hate surprises.
Financial statements should be supplied on a timely basis as specified in the loan documents. Company management should create a covering letter explaining any significant variances from prior periods or projections. The presentation in the letter to the lender should cover both the problem areas and the solutions. It is also important to point out any positive surprises resulting from management's ability to capitalize on a specific opportunity. These explanations should relate to the balance sheet as well as the income statement.