How to use your banker as a strategic resource

CNN® data indicates that the economy has recovered by more than 90% from its pre-pandemic level. This environment creates a great chance for you to claim your company's place in the new business landscape.

Your business banker can be a knowledgeable source of strategic advice during this time. Explore the following five ways your banking partner may help your company.

Guidance

As the economy recovers, your business may be in growth or rebuilding mode. Your banker can provide input into potential business scenarios for new initiatives or the retooling of an existing operation. They can also lend insight into options for keeping costs low and financially supporting your company goals.

Some specific ways a business banker can help:

• Planning for growth: Your business banker can help you look at potential scenarios and assess your readiness for the plans you have. For example, if you are rebuilding a team after a temporary shutdown, your banker can help you determine if you have the funds to cover salaries and expenses. A line of credit, refinancing current loans, and other options may keep you on track.
• Mapping out an exit: Thirty-one percent of respondents to a recent survey from research firm i4cp® said the pandemic either significantly or somewhat increased the priority for having a succession plan. Succession planning can take several years or more, so even if you plan to run your business for the foreseeable future, it may be prudent to start planning now. Valuations are high right now, and potential tax changes could make selling your business costlier next year. Your business banker can help you plan for a variety of succession options.

Cash flow

Most businesses experience fluctuations in cash flow at some point. Recognizing when they are imminent allows you to take steps to minimize the effects. To reduce the likelihood of repeat cash flow crunches, your banker may help you identify the right processes and tools.

Businesses turn to their bankers for:

• Reviewing cash projections: While exact timing on inflows and outflows of cash may be difficult to pinpoint, your banker can help you identify the potential scenarios ahead and how you can prepare. For example, if you identify an impending shortfall, you can focus on collections, boost your focus on sales, or plan for tapping into financing.
• Improving collections: Many businesses may suffer cash dry spells due to slow customer payments. Your banker can help you identify this problem and determine what changes you can apply to your billing practices, collections, and late payment follow-up to resolve this issue. Utilizing a collections service to handle this challenge may help you manage the process and keep your business on track.
• Speeding up access to funds: Some companies decide to offer financing solutions to their customers to help ensure that their buyers can make purchases when they need them. Offering financing can also help your company know that it will receive timely payments. Once customers pay, remote deposit — a way to put payments in your account easily and quickly so you can gain access to funds — lets you make deposits right from your desk or a mobile device.

Real estate

As your business evolves, having an optimal location will help position you to serve current and potential customers. Your banking partner can assist you in planning how to refurbish your present location, move from renting to owning, or looking into purchasing new property.

Talk with your banker for guidance on:

• Finding funds for renovations: As your business profile or your customer needs change, you may want to spruce up your current location. For example, if you recently started an e-commerce business, it may make sense to reconfigure an area in your retail location for order fulfillment.
• Considering a purchase: An investment in property is one of the primary ways companies secure the space they need for the long term. Ownership also allows businesses to build equity in their property, which adds value to your company.

Your banker can help you explore the best business mortgage for a commercial property refurbishment or purchase.

Automation

Digitizing key aspects of your business may boost efficiency and free your team to concentrate on tasks important for your business development. Your business banker can suggest how automation may help reduce costs and improve your level of service, both to customers and employees.

Your business banker may advise you about digitization tools for:

• Streamlining payroll: Automating your payroll processing system can make it easier to pay your employees accurately and on time. Tax compliance is also simplified, and the margin for errors is reduced, as many systems can calculate withholding and other deductions for employees.
• Simplifying bill payment: Electronically scheduling payments for employees, vendors, and suppliers may support better cash flow management. In addition to the time savings of electronic bill pay, you can also securely schedule payments and know exactly when funds will be debited from your accounts.

Financing

Business bankers are experienced in how to choose and implement various financing tools. They can help you assess the cost and repayment terms of different types of loans and financing solutions, and to identify which aligns best with your current and future needs.

Some of the tools your banker can help you evaluate for your business include:

• Business line of credit (LOC): With an LOC, you only borrow and pay back exactly what you need. Using an LOC can be a good way to have cash on hand to cover short-term needs, such as inventory, or to help your business manage seasonal needs.
• Term loans: Several types of term loans are available, and your business banker can work with you to determine which types of options and repayment terms fit your needs. A flex loan is a short-term line of credit that turns into a term loan, which can be useful for purchasing items such as vehicles or equipment, while term loans with fixed or variable rates are more suited for large purchases.
• Small Business Administration (SBA) loans: A loan secured by the SBA may provide access to funding for businesses with a minimal credit history or fewer resources for a down payment. Your business banking partner can discuss whether an SBA loan is right for you.

Talk to your business banking partner to learn about the ways they can help you be more efficient with your financial management.