Bank reference

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Bank reference
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Bank reference is an information given by the bank to its customer (other banks, lending institutions). It regards the possibility of reaching some financial commitment from the customer of the bank. It is also called banker's reference or status inquiry (Inc The Leasing Expert 2010, p.37). It consists of (Inc The Leasing Expert 2010, p.37) :

  • The duration of customer's relationship with the bank
  • type and quality of collateral provided
  • the number of customer's balances and loans are taken
  • replica of the customer's statement of financial affairs on file with the bank.

A bank can realize such information after getting the written permission of its customers. Realizing reference requires a fee for providing the enterprises with that information. To receive bank reference requires should (Inc The Leasing Expert 2010, p.37):

  1. Fill a request and consent form
  2. Send the form to the customer and ask for filling the consent section and sending it back
  3. Use the attached letter to deliver the form to the customer's bank.

Key points of a bank reference

There are a few things you have examine in a bank reference (Inc The Leasing Expert 2010, p.38) :

  • Date Opened

That is very substantial. The company has to be operating for longer than 2 years. Sometimes companies claim that they have been in business for a few years but their statement shows something different. In that case, it is probable that they have another account in another bank or that they have switched banks in the last two years. It is needed to get the statement older than two years for the company that we are interested in.

  • Name exactly as it appears on account

It's another very important thing to check. The name of the company on the financial statement has to match the name on the customer's business check that the company is receiving during processing the lease document.

  • Non-Sufficient Fund(NFS)/Over Draft (OD)

The value of this indicator can change from zero to eighty or more. When it states more than five, approving the deal is starting to be more difficult. However, some cases have quite a reasonable explanation.

  • Trade references

If the request does not go beyond $ 25k, the trade references are not needed. It does not mean you should not examine the credit criteria of every single funding source.

Trade reference also indicates whether the creditor pays his payables on time. It is one of the most important things we can receive from this point of bank reference. From the trade reference form you can also get information on other subjects such as current balance, payment history, high credit, date opened and terms. The current balance shows if the applicant is carrying the balance. If the applicant is failing in paying interest, his current balance is higher than his high credit. Pay history is the summary of the most important information that we want to get from this point of the bank reference: whether the applicant pays within 30 days. High credit is the largest amount of money owed by the applicant, which has been approved due to the reference (Inc The Leasing Expert 2010, p.38).


Author: Witold Urjasz