Protect your money from digital threats with internal, external defenses

While mobile and cloud-based technologies have made everyday business tasks, such as banking, easier and faster to perform, protecting valuable data and systems in the digital space has become critically important.

Securing IT systems today requires both external defenses and internal education, and involves coordination among all business functions, including human resources, supply chain and research. Fortunately, banking institutions are equipping themselves to be an ally in the fight against cyberattacks.

Smart Business spoke with Jim Altman, middle market Pennsylvania Regional Executive at Huntington Bank, to learn more about how banks are helping companies identify and protect against digital threats.

What are the most pressing digital threats businesses face today?

Unauthorized access and malicious code are currently among the most prevalent threats to a company’s cybersecurity. These methods are most often employed to steal funds from businesses that regularly perform wire transfers.

Business e-mail compromise includes phishing campaigns in which an outsider uses what looks like a company e-mail address combined with social engineering — gathering personal information from social media sites to impersonate someone — to mimic the identity of the CEO, a company attorney, or trusted vendor.

Many organizations have dedicated professionals focused on preventing these types of attacks from the outside. However, research shows that internal weaknesses, such as mistakes by employees, rank higher than phishing attacks, third-party access and lost devices as the source of a breach.

How are companies defending themselves from such attacks?

Cybersecurity professionals are encouraging companies to consider their digital protection plan in the context of an overall business continuity strategy. That involves responding to threats through education, preparation and risk transfer.

Properly vetting employees and contractors, and establishing carefully managed access to the information specific to roles within the organization is just as important as a strong perimeter defense.

Additionally, they stress the importance of a culture in which employees feel free to challenge the need for information should they receive an email requesting a funds transfer. Company leadership, from the top down, should encourage a critical eye and vigilance in the verification process before an irreversible transaction is made.

Experts agree that it’s critical for companies to vet their cyberdefenses periodically by testing them with employees and vendors who have systems access. Data security — like all security — is only as good as the weakest link.

It’s also important to hold insurance providers, payroll processors, benefits administrators and others to the same standards as internal users. Third-party providers that have access to any sensitive data regarding customers or employees should be held to the same auditing processes and go through the same rigorous vetting process used to ensure the security of internal data.

Who can help companies devise a strategy to mitigate or prevent cyberthreats?

Companies should involve their financial institutions to help their business operate and perform successfully.

For example, some banks offer insurance coverage that protects against loss. Companies can minimize the potential for breaches by taking steps such as requiring dual approval on certain monetary transactions and advising on administrative changes. Those steps can go a long way toward protecting the company’s interests.

Some banks have in-house financial and insurance professionals who are available to engage the company and its employees in regular conversations on how to avoid all types of risks that can disrupt a business.

Regardless of the methods companies use to protect themselves, one commonality persists through all of them: Every person in the organization must understand the role they play in mitigating the risk of a cyberattack.

Insights Banking & Finance is brought to you by Huntington Bank

Leverage your bank’s investment expertise to uncover opportunities

The recent state of the market has led to excess cash on hand for many companies. Many are looking to seize the opportunity and invest. But when they do, they tend not to turn to their banks.

“Companies know to come to us for loans and deposits, but not investment expertise,” says Denise M. Penz, executive director of wealth management at Home Savings Bank. “We want business owners to see us as their partner, capable of addressing personal and company challenges. Much of that can be done by better leveraging their current banking relationship.”

Smart Business spoke with Penz about the ways in which banks have evolved to play a fiduciary role in their clients’ investing.

In what ways can a bank play a significant role in a company’s investing practices?

Most companies are already working with a bank for deposits, treasury services to manage day-to-day cash, and loans. Banks have a seat at the table. They’re looking at companies’ balance sheets and digging into their financials. It seems like talking about investment strategy would be a natural extension of that existing partnership.

Someone who works closely with a company’s balance sheet and balance strategies can identify areas the company might need more leverage, or more cash. They can also offer sound investment strategies based on the knowledge that relationship imparts.

How can a bank help shape personal investment strategies?

Often in meetings with business owners there are discussions regarding personal investments as well as business strategies. Those conversations provide another dimension to the relationship, help the banking partner understand the owner’s long- and short-term goals, and see the bigger picture by sharing information beyond the piece the bank was initially contacted to manage.

Seeing the bigger picture helps the bank understand the owner’s risk tolerance based on past and current market performance, and the business assets he or she is willing to put at risk. Past performance is not indicative of future results, but it puts into perspective the total need for cash and cyclical events that affect the investment process.

How has the bank’s role in a company’s investment strategy evolved?

Long considered a place for deposits and loans, over the past 20 years banks have become very entrenched in the investment market. Though banks tend to be more conservative than other investment strategists because of the unique regulations that banks are held to, they’ve always provided investment services to clients.

Banks work with companies on a holistic financial strategy. They recruit and employ investment experts — attorneys, CPAs, financial planners, tax experts — who together provide a breadth of knowledge that puts banks in a position to compete with anything individual investment firms offer.

Why should a company that hasn’t given much thought to its investment strategy at least talk to their bank about what could be achieved?

The market is ever changing, and that requires professionals on the financial side to help businesses navigate its new realities.

Business owners may be missing opportunities to employ financial and investment strategies that can greatly help their businesses, and in most cases, help them achieve their personal goals. Whether it’s general risk-tolerance decisions or balance sheet management, it’s important that every business move beyond the strategies they already know and understand, and tap into the expertise of their banking partner to find novel ways to make the best use of their cash.

Banks want business owners to know they’re available to help them develop their financial strategies and manage through the balance-sheet decisions they’re considering. Get a check up. Invite a bank to explore the books to find strategies that may present opportunities to grow the business in a different way.

Insights Banking & Finance is brought to you by Home Savings Bank

Stronger relationships are often the pathway to better customer service

Employees who approach their work with confidence are more likely to bring the same positive energy to their interactions with customers, says Kurt Kappa, Senior Vice President, Market Leader, Cuyahoga County, at Westfield Bank.

Thus, one of the best ways to strengthen customer service in a company is to place employees in roles that fit with what they do best.

“The ability to relate to customers with confidence and compassion can make a world of difference,” Kappa says. “When customers see that you employ individuals who are invested in their needs and are eager to provide a high level of service, it reflects well on the employee and your company as a whole. Customer service becomes less about being a job and more about helping people.”

The key to making this work is creating an environment where supporting customers and relationship building are held to the same high standards as being knowledgeable about the business.

Smart Business spoke with Kappa about how to put your employees in position to provide great customer service.

What is a common mistake that companies make in trying to provide great customer service?
Companies often fall into the trap of talking about how good they are at providing customer service without clearly defining how they deliver on that promise. What is at the core of their exemplary service? You want employees who enjoy their work and understand your business.

But they also need to be familiar with your company’s approach to customer service so they can respond in the moment. If this knowledge hasn’t been conveyed, or the company itself doesn’t fully understand the pillars on which its customer service platform was created, that’s a problem.

A customer service plan could center on building strong relationships, delivering quick response times, providing multiple contact points, flexibility or any number of other points. It could be a mix of all these characteristics.

The critical piece is that the components of the plan need to be clearly defined. Once the framework of a plan has been conceived, it’s important that everyone understands the thought process behind it and can visualize how it should be carried out.

What’s the key to empowering employees?
Obviously, there is a hierarchy in any organization in terms of the authority to act and make decisions.

However, it’s important that customers not feel as if they are being passed from one person to the next in their attempt to get a problem resolved. Successful organizations empower their business unit managers with standards. They are then passed down to department leaders, who are empowered with the authority to work within those standards to provide a positive customer experience.

Take steps to ensure that employees who do not have as much authority have easy access to someone who does to facilitate a faster response when a problem comes up. In some cases, it could be a very simple matter that a front-line employee can respond to without managerial support.

Schedule regular training sessions to talk about various scenarios that might occur during the workday to ensure that employees are as prepared as possible to assist customers.

How has technology affected customer service?
Technology makes it easier for customers to do business without the need to interact with someone in person or on the phone. From a profitability and efficiency standpoint, this can free up personnel to focus on other important tasks.

But that productivity comes with a cost if companies fail to maintain open communication channels for customers to ask questions, provide feedback and share their thoughts on your business. This is where relationship building becomes key.

Companies in today’s world must make the most out of every face-to-face interaction because there are now fewer of them. When those opportunities arise, talk about the new tools that are available and learn how customers feel about them. Make the extra effort to help customers have a better experience with your business.

Insights Banking & Finance is brought to you by Westfield Bank

Put your money to work as interest rates rise

There are off and on balance sheet investment opportunities for companies, much of which hinges on their short-term liquidity needs and their longer-term investment horizon. Many companies, however, have been complacent in the low interest rate environment and aren’t activating their excess cash. Expectations of rate increases should spur some to start.

“As companies look at their liquidity, they should be considering both what they need for immediate purchasing and what their needs are in the coming year,” says Jim Altman, middle Market Pennsylvania Regional Executive at Huntington Bank. “That will determine the liquidity they need, what they can invest and what investment instruments are best, which will enable them to maximize their returns.”

Smart Business spoke with Altman about liquidity and investments in an interest rate environment that’s heating up.

Why are companies not utilizing excess liquidity on their balance sheets?

Since interest rates have been so low for many years, many companies are not looking at how much available cash they have in their checking accounts compared to how much they need to cover operating needs.

It seems to be the case that larger companies, where people in the organization are focused almost solely on managing the balance sheets, are on top of this. They tend not to have as much excess cash because they’re always managing it.

Midmarket companies that have a few million dollars in their checking account have, for the past few years, not been earning anything on it. As rates begin to increase, there is reason to look into what options exist to realize returns on that otherwise stagnant cash.

Any cash remaining after operating expenses is excess liquidity that companies can and should invest or pay down debt. The smaller the company, the bigger the opportunity they have to put to work the excess cash that is otherwise not generating a yield.

Where might companies find excess liquidity off of their balance sheets?

The benefit of off balance sheet investments, especially when there’s a longer time horizon at play, is an enhanced yield to the investor. It’s critical for companies to determine their needs both in the near- and long-term so they can optimize, or in some cases create, yields. As circumstances change, whether anticipated or not, they can make adjustments that create liquidity or optimize yield.

How might interest rates play into a company’s strategy?

A higher rate environment leads companies to notice how their expenses change, but also encourages optimization of assets.

Interest rate adjustments expected to be made by the Federal Reserve will have an impact on what banks will be willing to offer for both short- and long-term loans — borrowers should expect to be paying more in the coming years on borrowed interest.

Conversely, higher interest rates are prompting companies that are holding on to cash to think critically about opportunities to maximize their yields.

How does excess liquidity factor in to the decision-making?

Companies should talk with their bankers about options to utilize excess liquidity, what vehicles allow the company to move easily from short- to longer-term options, and what, if any, instruments are available that pay on every bit of excess cash on a company’s balance sheet. The bank should be looking at a company’s entire financial need and not isolating their solutions just to treasury management or just to investments.

New banking products have been created, which means things aren’t the same as they were when banks were paying interest. For instance, banks can now pay interest on checking account balances and that can help midsize companies with their short-term needs.

It’s well worth the time to talk with a banker about maximizing short- and long-term liquidity needs and putting any excess cash to work.

Insights Banking & Finance is brought to you by Huntington Bank

How banks can help companies connect, add efficiency

Like many industries, banks have to break out from their traditional, transaction role that they’ve played for decades. They cannot take orders — make deposits and withdrawals, write loans — and wait for people to come to them.

“In the past, we haven’t necessarily gotten interactive, asked questions and tried to solve customers’ problems,” says Chad Hoffman, president and CEO of Richwood Bank.

Technology makes it easy to manage finances digitally and turn banking into a commodity. But a race to the bottom in pricing is not a great business model, he says. Community banks are dependent upon the community. They need to interact with their customers in creative ways. If banks become a resource, they can help business leaders improve the status of their company in ways that banks have never done before.

“Community banks are dependent upon people coming in and engaging. If the only person who sees you is the UPS delivery person who drops off your Amazon order, that’s not really a community,” Hoffman says.

Smart Business spoke with Hoffman about nontraditional services from banks that are doing more with the customers they have.

How are banks reacting to today’s market?

There are a couple approaches. Focusing on price — offering the lowest or highest interest rate, depending on the service — often only works for online banks with low overhead. They don’t need to pay for buildings or people. Other financial institutions are growing through mergers and acquisitions, with the idea that they can do more loans and more accounts because of a larger footprint.

Community banks, however, can provide additional value for both their individual and business customers. That can mean payroll services, wealth management, educational classes and even a marketing agency that, among other things, helps small and midsize businesses use geofencing in their digital advertising. (Geofencing creates a virtual geographic boundary, enabling software to trigger a response when a mobile device enters or leaves a particular area.)

These additional services aren’t just available to customers, but bank customers may get discounts for bundling services together. Business leaders like working with people they already know. If these services come from one place, the bank, they know who to call when something isn’t working well or if they have a question.

Progressive banks also serve as connectors, introducing business leaders to each other. A network of companies working together, forming new relationships, helps everyone.

Why are these kinds of services important to community-based companies?

Businesses have to do more with what they have; being non-customer-centric is the most dangerous thing companies can be. For example, retail businesses are under fire from e-commerce, so they have to improve the experience in order to attract customers. Many small and midsize companies don’t have the skills. They haven’t had to hyper-localize an ad campaign to get the most value from their marketing dollars. Technology is changing the game, like it always has, so businesses must adapt or become obsolete.

It’s not always about saving money, it’s often about saving time and adding conveniences. That’s why educational classes that teach management and leadership skills or strategic planning for business can be so helpful.

What does the bank gain in return?

Banks want their customers to do well. Helping companies be successful not only makes their account balances go up and lets them pay back loans easier, it also increases the quality of life. Community banks live, work and play in the same communities as their customers.

The value of the community bank should reach far beyond the deposit, account or loan to create an indispensable relationship for years to come. It’s about improving the overall financial picture, whether that’s educating people to help slow consumer debt, training managers to become better leaders or providing marketing services that get more customers through the door.

If community banks provide payroll services, for example, rather than worrying about payroll taxes and new regulations, executives can focus on strengthening the business itself.

Insights Banking & Finance is brought to you by Richwood Bank

Stronger relationships are often the pathway to better customer service

Employees who approach their work with confidence are more likely to bring the same positive energy to their interactions with customers, says Aaron Barnhart, Senior Vice President and Retail Sales Leader at Westfield Bank. Thus, one of the best ways to strengthen customer service in a company is to place employees in roles that fit with what they do best.

“The ability to relate to customers with confidence and compassion can make a world of difference,” Barnhart says. “When customers see that you employ individuals who are invested in their needs and are eager to provide a high level of service, it reflects well on the employee and your company as a whole. Customer service becomes less about being a job and more about helping people.”

The key to making this work is creating an environment where supporting customers and relationship building are held to the same high standards as being knowledgeable about the business.

Smart Business spoke with Barnhart about how to put your employees in position to provide great customer service.

What is a common mistake that companies make in trying to provide great customer service?

Companies often fall into the trap of talking about how good they are at providing customer service without clearly defining how they deliver on that promise. What is at the core of their exemplary service? You want employees who enjoy their work and understand your business. But they also need to be familiar with your company’s approach to customer service so they can respond in the moment. If this knowledge hasn’t been conveyed, or the company itself doesn’t fully understand the pillars on which its customer service platform was created, that’s a problem.

A customer service plan could center on building strong relationships, delivering quick response times, providing multiple contact points, flexibility or any number of other points. It could be a mix of all these characteristics. The critical piece is that the components of the plan need to be clearly defined. Once the framework of a plan has been conceived, it’s important that everyone understands the thought process behind it and can visualize how it should be carried out.

What’s the key to empowering employees?

Obviously, there is a hierarchy in any organization in terms of the authority to act and make decisions. However, it’s important that customers not feel as if they are being passed from one person to the next in their attempt to get a problem resolved. Successful organizations empower their business unit managers with standards. They are then passed down to department leaders, who are empowered with the authority to work within those standards to provide a positive customer experience.

Take steps to ensure that employees who do not have as much authority have easy access to someone who does to facilitate a faster response when a problem comes up. In some cases, it could be a very simple matter that a front-line employee can respond to without managerial support. Schedule regular training sessions to talk about various scenarios that might occur during the workday to ensure that employees are as prepared as possible to assist customers.

How has technology affected customer service?

Technology makes it easier for customers to do business without the need to interact with someone in person or on the phone. From a profitability and efficiency standpoint, this can free up personnel to focus on other important tasks. But that productivity comes with a cost if companies fail to maintain open communication channels for customers to ask questions, provide feedback and share their thoughts on your business. This is where relationship building becomes key. Companies in today’s world must make the most out of every face-to-face interaction because there are now fewer of them. When those opportunities arise, talk about the new tools that are available and learn how customers feel about them. Make the extra effort to help customers have a better experience with your business.

Insights Banking & Finance is brought to you by Westfield Bank

Work with your bank to assess your company heading into 2018

As we slip into the fourth quarter to wind down 2017, it’s time to start planning for the year ahead. When it comes to running a successful business, there are many factors to consider, such as staffing needs, making improvements to operational procedures and addressing your company’s finances. That’s where your bank comes in.

“There’s something to be said for building a relationship with your bank,” says Adrian Pasquale, Vice President and Senior Commercial Lender at Northwest Bank. “Regular communication promotes a high level of trust and keeps your banker updated on what’s happening with your business.”

Smart Business spoke with Pasquale about how consistent communication with your bank can pave the way to enduring success for your business.

What key steps can a company take to build a stronger relationship with its bank?
Open communication is critical to establishing and maintaining a strong relationship with your bank. You should have a team of trusted advisers in place working to identify growth opportunities for your business, with your banker at the top of that list.

To maintain a strong relationship with your bank, conduct an annual financial review and share projections for the upcoming year so potential credit needs can be addressed. If you’re in growth mode — either organically or through acquisitions — quarterly meetings help make your bank aware of potential needs so it can react appropriately.

Since bankers work with a variety of companies in various industries, they have a wealth of knowledge in terms of current market activity, trends and experience in structuring credit which can provide value to business owners.

What benefits does this provide the company?
In today’s fast-paced world, business moves at high speed. As a result, financial needs can change rapidly as well as the need for equipment or short-term working capital.

By maintaining a strong relationship with your bank, both you and your bank can respond more quickly to potential financial needs. A shortage of working capital or delays in financing can impact your bottom line and result in lost opportunities. Clear communication with your bank can help you avoid that fate and get the capital you need to grow and maintain your business.

What are some things companies may not know about how banks function that could enable a stronger relationship?
Most customers aren’t aware of the strict regulatory requirements federal agencies require banks to follow, which mandate that they keep historical and current financial data for borrowers on file to determine creditworthiness.

Most loan officers also work in a team setting where analysts prepare a credit summary  to obtain credit approval. Having a solid relationship with your banker would facilitate the loan approval process by maintaining updated files.

What materials or information should companies have available to make a meeting with their bank more productive?
Critical documents for bankers to review include current accounts receivable and accounts payable. These documents can help your banker determine potential credit needs.

If your company relies on federal funding as well, any information to help support continued funding is very helpful. Your banker should truly be your trusted business adviser and reinforce a solid relationship with your business. Banks can help support business growth and development, so the communication lines should be open and ongoing.

Relationships are a key to success with all businesses, no matter the industry. So maintain key relationships with your business partners and give your business a chance to achieve higher levels of success.

Northwest Bank is Member Federal Deposit Insurance Corp. (FDIC)

Insights Banking & Finance is brought to you by Northwest Bank

Banks can be a valuable partner as you look ahead to 2018

The fourth quarter is an important time to tie up loose ends and wrap up your financials while beginning to think about what the upcoming year might bring for you and your business.

“Regular reviews of your finances are vital to ensuring continued success and to avoid unpleasant surprises in the first quarter and come tax time,” says Lisa Carey, senior vice president and district manager at Northwest Bank.

“By keeping your financials up to date and regularly reviewing them with your banking partner, you can be prepared for whatever comes your way and stay the course to financial success.

Smart Business spoke with Carey about how businesses can wrap up their last quarter and plan for future success in the coming year.

What are some key things a business should be thinking about as it prepares for the final quarter of the year?

It’s important to know where you stand now, rather than after the first of the year. Take a holistic look at your finances for the year to assess what went well and identify problem areas that you could improve upon.

Touch base with your tax adviser to ensure you’re on track for the upcoming tax season. If you’ve had a successful year, you may want to increase your contribution to avoid tax penalties. If your fiscal year coincides with the calendar year, you should start creating your budget for the upcoming year and also plan to meet with your leadership team, board of directors, advisory council, consultants, advisers and staff to begin your strategic plan.

How does the company’s performance for the year thus far affect the strategy going into the fourth quarter?

The first thing you should do is look back at what your business has accomplished over the past three quarters to understand what worked and what didn’t. If you’ve had a good year, you may want to consider acquiring capital equipment to take advantage of accelerated depreciation.

In other words, it’s a method where you invest in an asset that loses value at a faster rate than traditional assets to minimize your overall taxable income for the year. The third quarter is also a good time to evaluate your overall line expenditures like personnel, marketing and operational budget to see where you need to make reductions or increase your spending in the upcoming year.

Although you may be tempted to focus only on successes, failures are just as important to evaluate. It can be tough to swallow, but they need to be evaluated so you and your team can avoid making the same mistakes in the future. 

What are key things you can do during the final quarter to set your company up for success in the first quarter of the new year?

In order to set your business up for success in the new year, you should do a thorough review of your company’s year-to-date progress — what are you doing well and what can be improved upon? You should also have an understanding of the global economy and how it may affect your industry.

If, for example, you work in the tourism industry and the price of oil is expected to skyrocket, you may want to consider planning for a downturn in your industry as people cut back on traveling. As technology continues to evolve, you should also review your IT budget to see where you can improve processes to elevate your overall efficiency and cut back on unnecessary spending.

Information security is also an important expense to consider investing in as we see data breaches and cybercrime continue to rise. 

How can a bank help the assessment of your company’s performance through the first three quarters?

Conduct a regular review of your financials with your bank throughout the year to ensure you’re on track to meeting your financial goals. Your banking partner should be available to review your financial statements and see where your business is at and how you can improve. Work collaboratively with your bank to set your business up for success in 2018.

Insights Banking & Finance is brought to you by Northwest Bank

 

Strategic planning and the importance of proper capitalization

Successful companies go through a variety of business cycles. Unfortunately, many in leadership positions don’t plan for those stages and aren’t properly capitalized when a transition occurs.

“Without a thoughtful five-year plan that’s updated annually to address shifts and changes in business cycles, companies often don’t have enough capital to compete effectively as they grow,” says Jim Altman, middle market Pennsylvania Regional Executive at Huntington Bank.

He says companies may find that in order to compete more effectively, they need to broaden or diversify their capabilities through an acquisition or expansion because they find they either need to create efficiencies or can’t do it alone.

“Companies that don’t do strategic planning and think about their capital needs through the process might find they aren’t properly capitalized for a crucial next step.”

Smart Business spoke with Altman about the importance of matching a financial plan to a company’s strategic plan.

In what areas should capitalization factor in to the discussion as companies go through strategic planning exercises?

Every year, as a company reviews its strategic five-year plan to make updates, it should challenge itself with the question: Do we have enough capital to execute the plan? Consider whether enough capital is available or could be obtained to acquire a business or sell a piece of the company’s existing business, or to invest equipment to be more competitive. If not, how will the company endeavor to get the capital it needs? That might mean more than just bank financing. It could mean equity, subordinated debt or retention of profits.

Put on paper a financial plan that supports the strategic plan. In essence, monetize the strategic plan so the company can be sure it has a plan to obtain the capital to grow or be more competitive. Many companies don’t do this and it can often be too late before they recognize they can’t finance their plan in time to execute.

Who is important to get involved in these strategic planning discussions as the topic of capitalization is brought up?

Many companies don’t leverage the resources of their banker, CPA or lawyer. They all have insight and advice on how to make a plan come to life. But if they’re not involved in the plan, they’re ineffective in providing advice.

All of these advisers, as well as the company CFO or treasurer, should be in same room with leadership brainstorming. Early conversations can touch on strategic priorities and plans to execute them to broaden thinking. This creates a dynamic environment in which ideas come together to provide the right advice to make a strategic plan work.

When strategic planning is through, what should companies know about their capitalization?

Companies should know the options that are available to improve or meet their capitalization requirements. That could mean seeking bank debt, raising capital from different sources, their own profits or subordinated debt. They should have explored their options and the associated risks of each, and know the cost of those choices.

Companies don’t want to be in a position to suboptimize because they didn’t plan far enough in advance to execute their capital choices. They could end up having to give up control or choose a costly option because they didn’t plan effectively.

While it’s impossible to plan for every scenario because there’s so much uncertainty, companies should plan for what they can control and update that plan annually to reflect changes in the market. It’s important to know the execution risk, the availability of capital and the timeline necessary to acquire that capital.

Leadership should utilize as much internal and external resources as possible rather than relying solely on their own insights and knowledge, which could be limited. A combination of inside and outside partners is powerful.

Plan early, update regularly and get the right people involved in the planning process.

Insights Banking & Finance is brought to you by Huntington Bank

Banks enjoy the opportunity to discuss their business clients’ future

Technology has made many aspects of life easier, including banking. When you’re a business leader with numerous daily responsibilities, the extra time you gain from not having to make a trip to the bank can be quite valuable. Care must be taken, however, to ensure that the relationships you’ve built with the people at the bank are preserved, says Rick Hull, Executive Vice President/Regional President at Home Savings Bank.

“It becomes very easy for people to hide behind texts and emails and avoid personal contact,” Hull says. “They may believe that they are doing others a favor by not engaging in a conversation by phone or in person. But those live interactions help strengthen relationships. In the banking world, companies need to be in regular contact with their bank to ensure they are on the right path to maximize the growth potential of the business.”

Smart Business spoke with Hull about some keys to establishing a better working relationship with your bank.

How often should company representatives meet with their bank?

The frequency of communication is different in every circumstance. There are companies that prefer to meet with their bank on a quarterly basis. They value the routine of sitting down every three months to review financial statements and get an update on where the business is at from an economic perspective. Other companies would rather meet annually to recap the past year and make plans for the year ahead.

Banks will almost always defer to the desires of the client. In some cases, the company has no need for audits as it has built a system that has proven to work quite well. But these same businesses will still take the time to review their statements each year and set up a formal meeting simply to ensure that they haven’t missed anything. Banks appreciate clients that are proactive and take the initiative to maintain a regular dialogue to discuss their fiscal status.

What do companies tend to miss when conducting their own fiscal review?

When bankers review a company’s financial statements, they look for trends. What’s the status of that company’s receivables and have there been any changes worth noting? Does the company have more invoices than usual that have stretched to 45 or 60 days without being paid? Left unchecked, these trends can lead to bigger problems that hamper the company’s growth.

On the payables side, banks can help clients identify opportunities to dictate better terms with vendors. They may not realize that they can earn a discount by paying an expense within 10 days. Bankers are continuously looking for options that allow their clients to function more efficiently.

How should a company raise concerns it may have with its bank?

Bad news does not typically get better with time. If a company has an issue or a concern either with something that has happened internally or with the bank itself, it’s always better to have that conversation early and openly address the problem. If it’s a financial problem such as the loss of a key client or an industry challenge, the sooner the bank can get to work on finding a solution, the better off the client is going to be. Banks can take steps to help address problems with cash flow or monthly payments such as deferring a payment or making it interest only for a period of time. If the company delays communication and the problem gets worse, the path to a solution can become significantly more difficult.

What is the benefit of working with more than one bank?

Even companies that have built a strong working relationship with one bank should consider taking some of their business to a second bank. It could be a small equipment loan or an arrangement to lease cars. It’s much easier to initiate a relationship with a bank when you don’t need to do it. It serves as a protection against unexpected changes that could happen at any time. A bank may find itself in a position where it has to make changes that affect your business, through no fault of your own. If you don’t have a backup plan or a relationship that has already been formed, it could make the transition more challenging.

Insights Banking & Finance is brought to you by Home Savings Bank