Succeeding Where Others Fail
In spite of these disadvantages, some companies routinely pay far less then their competitors for bank services. What’s their secret?
To begin with, these companies know that the payback for managing borrowing costs and service fees isn’t a one time cost time saving. It’s an annuity. Their rule is bank cost savings have a five-times (5X) multiplier effect. A $25,000 bank fee cost reduction is worth $125,000. The value creation yardstick gives bank fees much needed visibility. It highlights the real cost of letting fee negotiations slide.
Second, these companies want the best banking deal that’s available. Nothing more. Nothing less. They also know that when it comes time to set borrowing costs and bank fees, you get what you deserve, and you deserve what you negotiate.
Finally, financial executives in these companies are pragmatists. In their world, bankers aren’t scoundrels or villains. Bankers are smart business people who make the most of their negotiating opportunities. To level the playing field these companies rely on a negotiating aid that’s fundamental to the idea of principled negotiations – benchmarking.