How to recognize when it’s time for a new bank

If asked why they left their bank, business owners typically cite issues with fees or high interest rates.

“That’s where dialogue may begin with a business owner. But when you drill down, what’s at the crux of the matter is a lack of attention, communication and follow up,” says Jack Frencho, Wealth Management Advisor at The Private Client Reserve of U.S. Bank. “They feel as if they’re taken for granted and the bank no longer values the relationship.”

Smart Business spoke with Frencho about how knowing when it’s time for a new bank.

How would business owners know when they’re no longer getting the best service from their current bank?

Generally, business owners learn they may not be getting the most out of their bank after having a discussion with another business owner about the deal terms, rates or services that differ between them.

Otherwise, concern arises when business owners discover their bank officer is no longer proactive — there is no follow-up on requests, it takes several days or weeks to get a response. That will generally drive clients to scrutinize their fees.

Many times the perception business owners have of their bank is more qualitative than quantitative. They feel there are no more new ideas or solutions being presented to them by their banker that would help their business.

What must business owners do once they decide to switch banks?

Business owners should gather copies of all existing loan documents, statements and contracts that disclose the terms, fees and penalties of those arrangements before meeting with a new institution. Also have available statements outlining operating account, treasury management, payment solutions or credit card transactions. This allows for direct comparisons to any new offer, potential terms and structure of a relationship with the new bank.

Those who utilize a lockbox or similar service should be prepared with an analysis statement that will show an itemization of any transactions within that product.

What is the timeline for making a switch?

The time it takes to make the switch from one bank to the next varies. Generally, the process to switch without a lockbox would take 45 to 60 days.

Lockbox account services take more time to transfer because vendors need to be contacted and a new lockbox must be opened, so it’s advisable to keep the old one open for four to six months after the new lockbox is up and running.

The new bank should do most or all of the heavy lifting when it comes to the logistics of transferring accounts.

How can the business owner make a change without setbacks?

Many loans are fixed rate, which generally speaking, have a prepayment penalty clause built in. The new deal terms should offset some or all of the prepayment penalty. If the costs of moving the loan are substantial, the business owner may need to move all but that credit relationship to the new bank to mitigate the prepayment penalties.

Variable rate loans are not subject to a prepayment penalty, which should make the decision to move easier.

How can a business owner ensure the new banking relationship remains strong?

Going into the new relationship, set mutual expectations upfront, such as the level and frequency of conversation, service standards, and email and phone call response times.

It comes down to managing expectations around problem resolution. It’s advisable to meet no less than annually, preferable biannually, to go through a thorough relationship review.

Regular communication is central to a good banking relationship. A bank should make sure the business owner understands the particulars of the deal terms and the structure of credit facilities in place. That structure exists for certain reasons. A collateral shortfall, for instance, will necessitate specific rates or covenants. Your banker will help you understand why you’re getting a specific deal.

The relationship with one’s bank can and should be healthy, built on mutual trust and open and honest communication. If those elements aren’t present in the current relationship, it’s time to look elsewhere.

Insights Banking & Finance is brought to you by U.S. Bank

How to get the most out of your local banking relationship

Misconceptions about banks still linger for businesses, even though it’s been easier to obtain financing in recent years. Some incorrectly assume that banks only lend money during good times when companies least likely need it, or that during the economic downturn regulators prohibited banks from lending money. Still others erroneously believe that their business is too small for conventional bank financing.

“But we think there are easy ways around these views if you’re working with banks — and there are lots of good community banks in Cleveland — that take the long view with customers, and help companies through both ups and downs in the economy,” says Tom Fraser, president and CEO of First Federal Lakewood.

Smart Business spoke with Fraser about how to get the most from your bank with a consistent, predictable relationship for both good and bad times.

What should a business owner look for when choosing a bank?

When selecting a banking partner for your business, first investigate the institution’s history of financial performance and stability. If that is strong, it indicates that its risk appetite will remain steady and it has the potential to be a consistent partner.

Additional criteria to examine are the bank’s suite of services, the depth of its expertise and the markets that it serves. It’s important to know if a bank has a track record of interacting with businesses in your market segment, and if the banker and team who will own your account have experience applicable to your business requirements. More specifically, delve into whether or not they have an aptitude to understand your business and to anticipate your needs as they evolve over time.

Should a business interview their banker?

It’s fair to ask your banker some questions. For instance, find out what other small and middle market companies the bank has dealt with and what solutions those have brought to bear on the market. You might also consider asking how the bank’s risk appetite has changed since the economic downturn. Think of your bank as your company’s largest vendor. You want to know your critical suppliers are reliable and available.

Also, as a CEO or CFO, you should know the bank’s president and chief lender. Your financial future should be entrusted to someone you know and trust, rather than an anonymous committee or policy.

What’s the biggest benefit to banking locally?

Beyond quick access to decision-makers, there are several reasons to bank locally. First and foremost, when business owners and consumers make deposits with a locally owned or headquartered bank, those funds are reinvested locally. This concept of mutuality creates a healthy business climate and contributes to a vibrant community. Teaming with a community bank is also beneficial because of its depth of relationships with other area professionals.

How else can business owners get more out of a banking relationship?

Like any successful relationship, the key is to invest time getting to know each other. A financial partner is a critical player in a company’s success, so it is vital that the bank and business know what each other’s priorities are as well as how each party operates internally and goes to market. In order to achieve that, open communication at every level is critical, including branch staff, members of the bank’s treasury team, and operations and support personnel.

Your banker should act as a trusted adviser. For example, bankers have experience with cash flow cycles and expansion opportunities, so they can readily help with early advisory initiatives for financing — and they don’t charge hourly like CPAs and attorneys. It’s also often more economical to work consistently with your primary bank because you’re already sharing information.

How often should you look around at the offerings and benefits of other banks?

It goes without saying if there’s a problem you need to explore new options. More proactively, if there’s a major intersection in your company’s trajectory on the horizon, such as a new building purchase, an acquisition of new equipment, an acquisition of another company, etc., that might be a great time to make certain that you are in the best possible relationship to meet your upcoming needs. A good banker will never mind being put to the test.

Insights Banking & Finance is brought to you by First Federal Lakewood

Economic outlook: 2015 will likely bring jobs and clarity to Pennsylvania with steady growth

The Keystone State’s economy is poised to enjoy strong growth in 2015.

“The fundamentals show a strong foundation for growth that will begin accelerating over the coming year,” says Jim Glassman, head economist at Chase Commercial Banking.

Smart Business spoke with Glassman about Pennsylvania’s economic health and what the future will bring.

What do current indicators tell us about the Keystone State?

Recent economic data indicates steadily improving conditions for growth. Long-term gross domestic product (GDP) growth trends show momentum in Pennsylvania’s economy, with the state finally regaining its prerecession growth trajectory. Though recovering economic ground lost during the recession will take years, the state’s economy currently holds potential for expansion.

Regional business leaders are gaining confidence. The Federal Reserve Bank of Philadelphia’s Survey of Business Conditions reveals that the majority of businesses are experiencing an uptick in current activity, and expectations are widespread that favorable conditions will continue into 2015.

Rising home prices and the gradual restart of construction activity shows a strengthening real estate sector. Compared to the national average, Pennsylvania’s housing market avoided the bubble’s worst excesses, and homes held their value relatively well throughout the crisis. In 2010, the average Pennsylvania home was worth 10 percent more than the national average — but that disproportion has vanished in recent years, as the national market recovered. Housing prices have now fallen in line with national averages, indicating a stable market. In 2015, the state’s real estate and construction sectors should finally join the nationwide housing revival.

Following years of below-average growth, Pennsylvania’s labor market finally saw steady gains in 2014. The state’s official unemployment rate has fallen below 6 percent and is expected to continue to decline modestly in the coming year.

What does declining economic distress mean for Pennsylvania?

Although Pennsylvania experienced a milder recession than many states, the downturn still caused turmoil in the local economy. Key indicators of economic distress —personal bankruptcies and layoffs — soared during the recession. Today, signs of distress have returned to prerecession levels.

The housing crisis generated a wave of foreclosures and personal bankruptcy filings, but foreclosures have finally subsided. Personal and business bankruptcy rates have been falling steadily since 2010, and filings are currently at their lowest level since 2007.

Weekly reports of first-time jobless claims provide insight into the current business climate. Layoffs have fallen considerably below prerecession levels, and the economy is letting go of few jobs — a sign that businesses are retaining workers.

Which industries are driving the recovery?

The energy sector continues to be a bright spot. The pace of oil and gas exploration remains far below its 2012 peak, but the steep falloff of recent years appears to have stabilized; by historic standards, new drilling activity in Pennsylvania remains high. Meanwhile, wells drilled during the state’s boom years are yielding cheap natural gas and plentiful petrochemical feedstocks for Pennsylvania’s industries.

The state’s economy is also poised to benefit from growth in the service and health care sectors. Pennsylvania’s service-oriented workforce contributes to greater economic stability than the national average, and the relatively large footprint of the state’s health care industry also contributes to lower economic volatility.

How much will Pennsylvania grow in 2015?

Pennsylvania’s economy is building on a strong foundation, and the state has considerable potential for growth. Pennsylvania’s GDP is projected to post 2 percent growth in 2014, and the economy should continue to accelerate through next year, with the pace of expansion reaching 2.9 percent. Forecasts anticipate a steady 2.8 percent annual growth rate through 2017.

The economic outlook appears clear: In 2015, the state’s economy should broadly align with the national trends of falling unemployment rates and accelerating GDP growth.

Insights Banking & Finance is brought to you by Chase

Banks with specialized experience offer clients a wealth of knowledge

The idea of specialization in financing is not too different than specialization in, say, the medical field — turning to a medical specialist who has experience treating a particular injury or illness versus seeing a general physician. In each case working with someone whose concentration is highly specified can be of great benefit.

John Hart, a senior vice president and Ohio market manager at U.S. Bank Commercial Real Estate, says there is good commercial real estate activity in the region, and expects the pipeline of projects will remain strong into 2015.

In an environment of steady activity, it’s important that businesses find the right banking partner to help them see projects through to completion. But many businesses get hung up on deal terms, forgoing a partnership for better rates.

“Banking specialists, because of their experience in a particular industry, are better able to keep borrowers apprised of trends, upcoming regulatory issues, changes in capital structures, etc.,” says Hart.

“There’s much more to consider when seeking a commercial loan than just the terms of the deal.”

Smart Business spoke with Hart about industry specific lending and how it plays out over the life of a business/bank partnership.

Why should a business be concerned with anything but deal terms when trying to secure a commercial real estate loan?

Surety of execution in a timely fashion is an important consideration for loan candidates — the ability of the bank to do what it promises and execute in a timely fashion.

There are many touch points during the course of a construction or development project. Banks with the right expertise can help guide clients through the process appropriately.

What services might be missed if the exchange becomes transactional?

When the loan process becomes completely transactional there’s little or no opportunity for a bank and a client to develop a full relationship. That’s important because a good banker can become a trusted adviser to a borrower. They have a chance, through the deal, to get to know a client’s business and its borrowing strategy, which allows banks to become better in tune with the situation and help borrowers achieve their goals.

If a banker and a client are just completing a transaction, that opportunity isn’t there. Borrowers then miss out on the chance to establish a relationship with their banks and receive additional advice from experienced advisers through the course of the project.

Some larger banks that have specialized services are able to bring other resources to the table based on the scale of the bank. Additionally, having a larger geographical footprint can be of benefit to some borrowers because banks of this size often have the scale to help with future development outside of a client’s home base.

What can banks that have a dedicated commercial real estate division offer that banks without one can’t?

Some banks that have a dedicated commercial real estate group are more likely to have industry and client-specific products and services. They have a better feel for the needs of, say, an apartment developer compared with someone who develops hospitality projects.

A specialized banker can bring in dedicated product partners who have specific experience to match the needs of that particular developer on a specific project.

How might working with a bank that has a dedicated commercial real estate division add value to real estate financing?

Someone who knows a borrower’s industry can be far more responsive to the clients needs and issues than more generalized lenders. Specialized bankers are set up to grow with the borrower’s business, handling many loans throughout the business’s life cycle, and are best equipped to deal with the increasing complexity of projects the borrower undertakes as his or her business increases its reach.

Working with a specialist at the outset of a project means having a partner along the way to help the borrower achieve exactly what he or she sets out to accomplish.

Insights Banking & Finance is brought to you by U.S. Bank

How to protect your business against modern fraud

The threat of cybercrime and Internet fraud looms large in 2014. With the expansion of global markets comes a rise in tech-savvy criminals who are poised to breach privacy and threaten organizations across the world.

“To protect not only their own information but their customers’ as well, companies must be more vigilant than ever against a wider range of fraud and scams,” says John L. Hayes IV, senior vice president of the Western Pennsylvania Middle Market, Chase Commercial Banking.

Smart Business spoke with Hayes about how you can protect your business.

What constitutes fraud?

The fast and easy definition is an intentional misrepresentation of facts with the intent to mislead. But it’s not always as black and white as a stolen identity, falsified financials or stolen data. If your business is negligent and fails to act on suspicious information or red flags — or simply fails to verify the information you’re provided — you could be complicit in another’s fraudulent actions.

What are some examples of fraud that impact businesses?

There are a number of fraudulent schemes your business might encounter, such as:

  • Check fraud. The most common fraud committed, it includes counterfeit, altered and forged checks. In an Association for Financial Professionals Fraud and Control Survey, 82 percent of respondents reported that checks were the primary target for business fraud attacks in 2013.
  • Payroll fraud. Payroll fraud occurs when an employee or vendor makes false compensation claims and attempts to collect more than they’re owed.
  • Internet fraud. Cases of Internet fraud grow every year as criminals get smarter and companies get lax about security. If your company’s data isn’t properly protected, hackers can break into your servers and steal private and confidential information about your company, employees, vendors and/or customers.
  • Phishing. Phishing attacks are carried out via fraudulent emails, instant messages or messages on social media sites that dupe targets into providing sensitive information or carry malicious software.

You can find an in-depth list on the FBI’s website (www.fbi.gov/scams-safety).

How can businesses defend themselves?

The best safeguard is education and training. Businesses have a responsibility to implement internal control strategies, which range from requiring sophisticated fraud-prevention training programs to instituting reporting requirements and operating procedures when attacks occur. To protect your business from the financial loss, reputational risk and liability of a breach, utilize the following best practices.

Limit mobile device access. As businesses allow and encourage bring your own device policies, hackers have responded by designing malicious software that targets mobile devices, which are capable of leaking sensitive data. Experts estimate up to 10 percent of legitimate apps could potentially leak logins and passwords, nearly 25 percent may expose personally identifiable information and 40 percent communicate with third parties. If you have networks that access sensitive information be particularly wary of allowing employees to use unsecured systems and devices at work.

Combat phishing with social media awareness. Through the wealth of public information from social media profiles, such as names, job titles and birthdates, phishing scams have become extremely convincing. Fraudsters pose as a trusted client or friend, and employees can be deceived by the information mined through a few Internet searches. Educate your employees about the risks, train them on utilizing the privacy features of social networks and show them the hallmark signs of phishing attempts.

Use a Virtual Private Network (VPN). When employees work remotely, data travels from server to server on the Internet, becoming less secure with each jump. But within a VPN, encrypted information is transmitted directly from computer to computer, reducing the risk of sensitive data being harvested by infected servers.

Conduct regular audits. Aside from the fact that this may be a compliance requirement, there’s simply no better way to see what’s working and what’s not than to conduct consistent audits of internal and external security policies and processes.

Insights Banking & Finance is brought to you by Chase

Governments miss out on timesaving solutions by not opening up to banks

Federal, state and local governments have unique needs. Banks, in response, have dedicated a portion of their business to address them.

“There are many best practices that can be implemented if one understands the laws that affect government,” says Karen Bigelow, senior vice president and regional manager of the government banking division at U.S. Bank.

With open communication, banks can develop customized services that help government entities. Getting them to talk, however, can be difficult.

Smart Business spoke with Bigelow about some underutilized services banks can offer government entities.

What do government clients need?

The needs of government entities are vast and broad. They need support in collections, disbursements, investments and borrowing the cash necessary to support operations.

The challenge with serving government clients is they are often broken down into decentralized units with special responsibilities. That requires banks to learn about all of them in order to take a consultative approach and apply experts in certain business lines to help these entities solve problems.

The more a bank understands how a government entity operates, the easier it is to recommend appropriate solutions. It’s critical to have a strong relationship that allows the sharing of information so that banks are not recommending a one-size-fits-all solution that isn’t appropriate.

What are the typical barriers to working consultatively with government entities?

The organizational structure of governments means not one person has all the details, so banks must talk to multiple people to get a full understanding of its strategies before offering consultation on services.

Governments often bid for banking services using requests for proposals handled by a purchasing department, leaving little interaction with a financial institution except through email. This impedes the consultative communication that leads to an understanding of the entity’s processes, which leads to competition among banks based solely on price.

What are common government pain points?

The most common issue is in addressing its collection and dispersing of revenue in a timely, but more automated way with reduced staffing and budgets.

Government, in an attempt to collect money securely, must to do so without disrupting customer service. A bank can work with government to find the most efficient process of delivering a service in the least costly way while balancing the needs of customers with the efficient execution of duties. This often requires a lot of consulting with its financial partners.

What services can banks offer that many government entities may not realize?

Banks can offer a lot of services traditionally provided by third-party vendors, such as electronic services for billing and collection, and presenting statements.

When looking to improve their technology, government entities will often hire third-party consultants, not financial institutions, to help implement the same electronic payment services banks provide.

Governments have an obligation to stale-date a check after a certain period of time that it’s been outstanding. Banks offer a service that helps them comply with state audit rules and automatically eliminate those checks from their outstanding payments. There are also lockbox collection services for all types of payments, including electronic.

In addition, banks can help governments disburse high-volume payments such as unemployment through card services.

How can working closer with a bank be beneficial to governments?

Government entities have a fiduciary obligation to protect funds, but they must do that while serving a diverse population. Sharing information about their needs can be beneficial. In the process, government entities gain free consultants while saving money by optimizing operations and minimizing third-party vendors, protecting their information and public deposits.

Time is a precious commodity. The more governments share information with their banks the more help can be provided to save time by processing more effectively.

Insights Banking & Finance is brought to you by U.S. Bank

How to make working capital a priority for your business

The financial landscape has changed enormously since the latest economic recession — and the differences have affected everyone in business, from the smallest startups to multinational corporations.

As easy access to large amounts of affordable credit vanished, businesses quickly realized that they needed to focus their attention on building and maintaining an optimal level of working capital if they were to survive and thrive in the evolving world.

“Simply put, working capital is a measurement of a company’s operating liquidity, or the speed at which a business can convert its assets to cash. Operating liquidity is an important metric in assessing the financial well-being of a business and is particularly important to stakeholders,” says Tom Engler, vice president of the Western Pennsylvania Middle Market at Chase Commercial Banking.

Prioritizing working capital allows companies to make strategic investments, which in turn drive operational efficiencies while reducing overhead, he says. While working capital performance is not the only factor in a company’s success and growth, it’s a very important one, and certainly a good place to start.

Smart Business spoke with Engler about what you need to know about working capital in today’s business environment.

What impact do receivables have on working capital?

Having too many assets tied up can have a huge impact on cash flow. Negative cash can spook investors and shareholders, and cause lasting damage to your reputation.

Actively monitoring working capital is the first step to good financial health. Identify patterns with incoming and outgoing assets and receivables, and align them to levels of working capital. It will become easy to identify trouble spots, such as consistently late payers or invoices that are sitting out for 30, 60 or even 90 days or more.

Also, tighten up on collections. Typically companies don’t like to nudge clients, especially new ones, but it’s vital that you keep the cash flowing in on a regular and prompt basis. This is even more important when you’re working with providers from non-interest-paying markets. In cases like these, consider implementing different strategies, such as capital surcharges, which operate as fees, rather than interest. Segmenting your strategies and aligning them by market will help keep your level of working capital a priority over the long term and improve cash flow in the short term.

How do outgoing payments factor into building long-term working capital growth?

Examine your own payment terms to your suppliers. Negotiating an increase in time-to-pay sometimes is more important than price in terms of managing working capital. When it comes to new contracts, negotiate clear and extended terms upfront, and then work that information into your evolving metrics.

For more established client relationships, managing terms can seem challenging. In these cases, having a straightforward discussion is the best strategy. Put together a plan of terms that would best manage your capital levels and present it to your partner — then work together to find a solution that best benefits both parties.

How does inventory management play a part?

Just as with receivables, having your assets tied up with extra, obsolete, devalued inventory is not only bad for the balance sheet, it’s bad for your company’s long-term health. Although companies often resist reducing inventory — fearing a hit on their ability to manage client satisfaction — having a management system in place is a safe, not sorry, bet.

Include inventory metrics as you map out receivables and payables over a designated period of time. Making this project a team effort and designating a leader to set key performance indicators and measure results is essential, and it will drive cost savings and improve efficiency across your company.

In the end, it’s all about accountability. Making a long-term, strategic plan to prioritize optimal working capital takes a whole team, from the top down. As you baseline your current position, and develop sustained metrics for improvement, you’ll be making a real, demonstrated investment in the future growth and financial stability of your business.

Insights Banking & Finance is brought to you by Chase

Control and monitor your spending with company credit cards

Credit cards have a reputation for helping businesses establish and build credit, but they’ve recently evolved into a much more powerful tool because of the benefits that can be derived from their role in money management.

Purchasing has been made more convenient with credit cards, especially with the increase in online spending, something that is difficult or impossible to do with cash or check. They’re also being used more as a way for businesses to better control accounts payable, synthesizing payments through one statement instead of having multiple bills with different due dates from many vendors.

Rewards programs that offer perks for purchases that companies will make regardless of the method of payment has added another dimension to the usefulness of credit cards.

Smart Business spoke with Deborah Julian, senior vice president and regional manager at U.S. Bank, to learn more about the evolution of credit cards as a purchasing medium for businesses.

Why use a credit card to manage cash?

Credit cards are a preferred, secure method of payment for many vendors, and they represent a much more timely form of payment than a check or cash.

From a money management perspective, credit card statements offer great detail — categorizing purchases and tracking more closely where money was spent and by whom. This can go a long way to managing where funds are going within a company and to helping a company get a focused perspective on its spending habits.

What does a company credit card allow a company to do that it otherwise can’t?

Company credit cards allow a business to implement greater efficiencies and help improve time management. Companies using cards get very detailed purchase statements that can flow directly into accounting software applications, such as QuickBooks, and then translate easily, and often automatically, into quarterly or annual statements. Purchases made through other methods require more manual reporting methods to track spending.

Reward programs that offer cash or credits that help offset travel expenses can be earned from making purchases with credit cards. These programs are becoming a much more desirable feature of company credit cards.

How does a company qualify for a card?

It depends on size of the company, its ownership and the spending limit requested. Other factors considered are sales, time in business, and depending on type of business and how the ownership is structured, a credit card may be attached to someone’s personal credit in addition to the business’s credit.

What controls should be in place to head off any potential misuse?

Companies can specify how cards are used and by whom, and can also set card-specific purchasing limits.

It’s important that only authorized users are given access to a card. In years past, a company would get a card and make it available to anyone in the company who needed to make a purchase. A better way is to authorize individual spending by assigning cards to specific employees, then it can be known who made the purchases. It keeps things very tight. Typically, a company’s decision-maker sets that access as well as the spending limit.

Controls can be further implemented on spending habits by designating the type of merchant and locations at which money can be spent. For example, an organization that has drivers who needed credit cards for gas purchases can install controls that limit the type of merchant at which drivers can make purchases.

As a safeguard, there is daily, weekly and monthly reporting available that allows a business to manage its spending further. It’s a good idea to have two people looking at who is authorizing spending and reviewing card statements to stay on top of card usage.

Many businesses are unaware of all the benefits, safeguards and perks that can be made available to them through a company credit card. Spend time with your business banker to discuss your options. These conversations can help your banker understand your needs and find a solution that fits your situation.

Insights Banking & Finance is brought to you by U.S. Bank

How to attract and develop a skilled workforce for today’s labor market

With the economy gaining momentum, businesses are facing a different problem — developing a sustainable and skilled workforce.

“Generating over half a million job vacancies nationwide, the skills gap is responsible for a full percentage point of today’s unemployment rate. It’s causing delays in America’s resurgence, particularly in industries like manufacturing, health care and construction — the industries that make up the lifeblood of the Pittsburgh economy,” says Dave Schaich, president of Western Pennsylvania Middle Market at Chase Commercial Banking.

Applicants don’t have the skills for open positions, and the consequences are real. Labor shortages cause construction delays and hamper productivity for projects big and small.

Smart Business spoke with Schaich about accounting for labor — just as you would capital — when navigating potential risks of new business operations or expansions.

How did the skills gap emerge?

After decades of offshoring, manufacturing is experiencing a modest renaissance, but vocational education has deteriorated. Older workers who dominate the industry are preparing to retire, and the next generation isn’t ready to fill positions.

Add in the high-tech nature of advanced automation that dominates U.S. manufacturing and the skills mismatch intensifies. In fact, employers may find workers comfortable with computerized systems steer towards white-collar careers.

What has been the effect in Pittsburgh?

While parts of the U.S. are experiencing more severe labor shortages, Pittsburgh isn’t immune. According to the Allegheny Conference on Community Development, the area has nearly 30,000 open positions.

Western Pennsylvania’s resurgence is fueled by industries that heavily rely on skilled workers, such as the booming energy and petrochemical industry with its army of welders, pipefitters and drillers. More than 41,000 are employed in the core energy industry, generating over $19 billion in annual activity or 16 percent of the total regional economy. Further, Shell’s Monaca natural gas refinery is expected to require another 18,000 skilled construction workers.

High-tech manufacturing employs more than 96,000. In the past decade, advanced manufacturing added 23,000 new positions, and the industry appears to be accelerating, adding 5,000 workers in 2011. Plastic, glass and metal production depends on workers at ease in a highly automated environment.

Area businesses are finding it equally difficult to hire traditional white-collar workers, such as qualified management and sales personnel. They cite a lack of soft skills, affecting their ability to innovate, respond to market demands and operate efficiently.

How can businesses lessen labor shortages?

To maintain operations and mitigate effects on revenue, businesses should be exploring options to tackle the skills gap head on.

Seventeen Western Pennsylvania unions provide free apprenticeship training for new members. Combining classroom instruction with hands-on training, workers are prepared for skilled trades in ironworking, pipefitting, construction or boilermaking. Though aimed at developing a new generation, this isn’t an immediate solution — most programs require four to five years before apprentices can work independently.

Community colleges offer vocational programs geared towards filling specific industry needs. The Community College of Allegheny County, for example, has a one-year mechatronics program focused on precision machining and industrial maintenance, especially in working with high-tech equipment. It also has launched a one-year welding and pipefitting program for gas and oil field workers.

This year, the Department of Labor’s (DOL) Trade Adjustment Assistance Community College and Career Training program will award $450 million in grants to promote public-private vocational training partnerships. Thus, employers encourage workforce development by sponsoring apprenticeships and work-based learning.

Another DOL program, The American Apprenticeship Initiative, extends $100 million for apprenticeships in high-growth fields, including health care and advanced manufacturing. It rewards employers that integrate work-based training with instruction to cultivate a skilled workforce.

Insights Banking & Finance is brought to you by Chase

What your business can do to keep from becoming a victim of fraud

Every time another high-profile company like Target falls victim to fraud, both consumers and businesses scramble to ensure they have safeguards in place to keep it from happening to them.

It’s a tough battle to fight, of course, as criminals are always plotting to find a way around the latest security software and protocols to stay one step ahead of the authorities.

“There is always something new,” says Maha Banoub, AAP, CTP, vice president for treasury management services at Bridge Bank. “And that is why there is no bulletproof solution. It’s a combination of fraud protection programs and behavior to reduce the risk. ”

Smart Business spoke with Banoub about what you can do to protect your business.

What are the latest trends in fraud?

There is still the traditional check fraud, where a check that the company issued is stolen and washed for a different name and amount or the fraudsters create a check from the business account’s routing number.

There is the Automated Clearing House (ACH) debit fraud, where a fraudulent ACH collection is initiated against the business account or the account numbers are used to pay the criminal’s own bills.

Fraudsters can also hack email addresses, either personal or business, and send the bank instructions to wire funds from the company’s account to the fraudster’s account. This is known as masquerading.

What type of business is most susceptible to fraud?

It’s usually small or midsize businesses. Large businesses are protected by firewalls and usually have very good controls.

The main focus of smaller businesses is usually not fraud control, but rather growth, making them very open to hacking. For example, accounts may be reconciled only monthly rather than daily, and once fraud is detected, it will be too late to return unauthorized transactions.

What can you do to protect your business?

Companies should continually educate their employees on the latest trends in fraud. Use fraud prevention programs such as Positive Pay, where your bank reconciles checks with a list provided by the company, and ACH filtering, where you set rules on how ACH debits are approved by your bank.

Reconcile or at least review accounts on a daily basis and keep an eye out for anything that seems out of the ordinary.

Discuss security that is available with your bank on a regular basis such as segregation of duties and dual authorization on outgoing payments or administration functions.

Educate employees to never open unknown or unexpected email attachments and to be cautious about opening attachments even from known sources.

Use complex passwords and change them often.

The rule of thumb is if something looks suspicious, it probably is. Your bank will never ask you for login information, for example, so be very cautious when communicating outside the company both via phone and email.

One practice that can increase security is to use a stand-alone workstation to conduct online banking activities. It should be a computer that is only used for that function and not for email or browsing the web.

How do you avoid living in constant fear?

If you’re protecting your outgoing payments, your checks and your ACH collections with filtering, it should give you some level of comfort. In general, banks are always reviewing transactions.

When the bank calls you to verify a wire, respond right away so they can detect potential fraud attempts. The most important thing to remember is that this should be an ongoing effort.

Regular employee education and discussions with your bank on preventative measures will ensure the best chance of preventing fraud on your business.

How much of an issue is cost?

Many of the online banking protection tools that banks offer are free.

There might be some cost involved with tools such as Positive Pay and ACH filtering, but if you consider the amount of money your business is saving by reducing the risk of fraud, the costs of these products is minimal.

If a check is written for $30 and is cashed for $300,000, that’s a huge loss for your company. When you compare the pricing, it’s nominal compared to the savings and peace of mind you’ll have. ●

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