Clear and concise is the way to go when selling investors on your idea

Clarity can go a long way toward convincing an investor to buy a stake in your business.

If you believe your company is headed in the right direction and you have evidence that clearly backs up this notion for potential investors, you could be on your way to making a connection that will help you achieve your goals.
If you can’t provide that evidence in a quick, concise manner, you’ve got a problem.

“Investors want to know what the story is, what the need is and what their money is going to be used to do,” says Ed Lambert, senior vice president and senior market manager at Bridge Bank. “If you can’t explain what you do in two pages, you probably need to go back and do some more homework.”

The move to raise equity can be a challenge, especially if you’re an entrepreneur who has put your blood, sweat and tears into building your company from the ground up.

It only gets harder if you’re not completely on board with bringing on a business partner.

“This is your baby,” Lambert says. “Do you really want to give away part of your child? Better said, are you willing to share custody? And if so, with whom?”

Smart Business spoke with Lambert about the decision to raise equity and the best way to approach investors.

How do you know when it’s time to raise equity for your business?

Before you approach an investor for an equity injection which will result in you giving away part of your company, you should always look at debt as an option.

Talk to your banker and explore the various possibilities that are out there, both within the bank and through partnerships the bank has in the community.

It’s also important to have people on the financial side doing the blocking and tackling of looking at the numbers and understanding where your company is at.

You may come to a point where you realize that you’ve gone as far as you can on your own and you need to raise equity. If you’re up to your neck in demand and you can’t fulfill the orders you’ve got coming in without an equity injection, that’s a good place to be and the evidence speaks for itself.

If it’s not as clear cut, you need a banker or investor to be able to look at your numbers and say, ‘Yeah, I see where you are coming from. We need to look at raising equity.’

How important is the mindset of the CEO?

Bankers are analyzing the numbers, but they are also relying on instinct. Does their gut tell them that you are a person they can work with? Can they trust you? Will you keep your word and back up what you say? It’s absolutely key that there is a comfort level between you and your bank.

You don’t have that many at bats with the investment community.

If you send them something that is unfocused, they are going to seriously question what you’re trying to do. It’s the fundamental core of every relationship. You need to convey a level of confidence and determination, backed up by numbers that show you are someone that a bank and/or an investor should want to be in business with.

What’s the key to making a strong presentation?

There are typically three types of financial scenarios for your business when it comes to raising equity: best case, worst case and most likely. Each of them plays a role.

The best-case scenario is what you show investors. This is what you think your company is capable of doing with equity from this investor under the right conditions.

Most likely is what you’re going to use internally when you’re talking to your own people. Here are the goals you think you can achieve by raising equity.

The worst-case scenario is what you share with your bank.

Bankers are lenders, not investors, so they are always going to want to look at the most conservative scenario. The bank isn’t betting on you being the next Google. It’s betting on whether or not you are capable of paying them back. ●

Insights Banking & Finance is brought to you by Bridge Bank

Companies use recurring revenue to finance cost of customer acquisition

Recurring revenue lending is an alternative form of senior debt financing that is particularly useful to growing companies dealing with the steep cost of customer acquisition.

“Companies can leverage a recurring revenue stream with debt which may lessen the amount of venture capital needed,” says Mark Breneman, senior vice president and business line manager at Bridge Bank. “By using this asset, they can lower dilution, gain liquidity and achieve positive cash flow more quickly.”

A growing number of companies with a subscription or SaaS (Software as a Service) model across many industries are looking at recurring revenue lines of credit to bolster their finances.

“Back in the day, technology companies sold equipment or software and billed on terms of net 30 days with just a small percentage of the sale coming from annual maintenance contracts that had recurring revenue,” Breneman says. “Now as we move to more of a subscription economy, the majority of a company’s revenue stream can be recurring because they are hosting and delivering software and technology to their clients through cloud-based subscription services.”

Smart Business spoke with Breneman about the Saas delivery model and how to know if would work for your company.

How does the recurring revenue model work?

When companies sell technology or software as a seat or a license, they typically require payment terms of net 30, meaning the payment is due in full 30 days after the time of purchase. A receivable is then created that banks can use to secure a working capital line of credit.

When companies deploy a SaaS model, the software applications are hosted and billed as a monthly or annual subscription fee. As an example, many companies are taking legacy software systems, moving them to the cloud and then charging a fee to host the application. Banks can then analyze the quality of the recurring revenue stream using several metrics including churn, customer acquisition costs and the lifetime value of a customer.

If recurring revenue is growing, churn is low and the lifetime value of the customer forecasts out to support customer acquisition costs. A bank can then apply a lending multiple to the monthly recurring revenue stream to support a line of credit.

Where should a company begin when looking at this model?

Start with your financial partner or your bank and see if they are comfortable with this type of lending. Do they provide these services? There are several banks and venture debt funds that are comfortable in this space. Talk to your banker, talk to your advisors and then find a bank or a financial partner that provides this type of financing and start the discussion there.

Going into this conversation, you should know your recurring revenue stream in detail.

Track your customer acquisition costs and the lifetime value of a customer, as well as your churn. Ideally the lifetime value of a customer should not be less than 3 times your customer acquisition costs.

What are some pain points in this process?

If you have a subscription revenue model or you’re a SaaS company, early successful companies will burn through a lot of money. That can be a healthy indicator early on, but it still may be harder to obtain financing from traditional sources.

If you’re adding customers very rapidly, even though it’s healthy, it causes cash burn. That’s why you need to seek out a bank or a fund that is really comfortable with this model and can help you through those tough spots.

How important is customer service?

It truly needs to be a long-term symbiotic relationship between the technology, software or service company and their clients. You’re not so much selling a product into a company and then servicing that product. You’re developing a partnership and a relationship. You have to win these clients.

But once you win, you have to continue to provide excellent customer service so they don’t leave you and take their highly coveted recurring revenue stream someplace else. ●

Insights Banking & Finance is brought to you by Bridge Bank

How to make a hassle-free transition to a new bank

Making the switch from your current bank to a new bank might seem like a hassle.

There are loans and lines of credit to close, automatic payments and deposits to redirect, and outstanding checks waiting to be cleared. Generally, it can appear as a time drain that pulls business owners away from concentrating on their business’s core functions.

This, however, is not the case.

Harry J. Eaton, assistant vice president and Business Development Officer at Consumers National Bank, says a business’s new bank has people in place whose job it is to ensure a smooth transition.

They’ll help a business owner make sure all scheduled deposits and withdrawals are routed to the appropriate accounts, train staff on new equipment and generally offer peace of mind during what could otherwise be a complicated transition.

Smart Business spoke with Eaton about how businesses can smoothly transition from one bank to another.

What are typical hurdles for business owners transitioning from one bank to another?

One of the main hurdles businesses experience when moving from one bank to another is transitioning their deposit accounts.

To do so requires time and a review of your technology to ensure existing computer equipment is able to handle sophisticated products like remote deposit capture and online banking.

Further, automatic deposits and payments must shift from one bank to another in a coordinated manner.

It’s important not to close the accounts at the old bank until it’s clear that money is no longer moving to or from existing accounts. The overlap is important because a business may have outbound or inbound checks that might not clear for 30 days.

It’s not likely the case, for example, that if the old account is closed there’s no place for automatic deposits to go. It just becomes a hassle to figure out where that transfer went wrong and it delays the business’s ability to use that money until everything is sorted out.

Once an appropriate amount of time has been given to ensure all deposits and withdrawals are going through the new account, it’s safe to close the old account.

What impact can a poor transition have on the business moving its accounts and that business’s clients and vendors?

There are several.

More and more businesses are using automatic deposits that feed checking accounts with customer deposits or distribute payroll to employees faster than can be accomplished with traditional methods. An improper transition can be upsetting to businesses.

If the flow of money from customers and to employees is disrupted, it can cause serious issues.

Banks that understand the potential pitfalls of an uncoordinated transition have deposit coordinators on staff. These staffers are available to help businesses make a smooth transition from start to well after the transfer has been executed.

They also can help ensure a smooth transition by offering training to staff and monitoring accounts to confirm money is moving as it should.

What is a typical timeline for making a transition from one bank to another?

On the lending side of a relationship, the timing is immediate because lines of credit and term loans are paid off, and the business starts using the credit facilities provided by the new bank. Deposit accounts, however, may take a few months to fully transition.

Once a business owner anticipates switching banks, which necessitates a change in checking accounts, he or she should contact any customers that are making automatic deposits.

Give them the date that the switch will occur and check in with them after the transition to ensure transactions are happening without incident.

Similarly, be sure to inform any business that is taking payments automatically from existing accounts when the change will occur.

Generally, expect the move to take place over the course of two to three months.

Transitioning from one bank to another might seem complicated, but bank staff are available to counsel business owners on transitioning smoothly and in such a way as to minimize pain. ●

Insights Banking & Finance is brought to you by Consumers National Bank

Cost-effective technology improves cash processing, mitigates risk

Processing cash is both time-consuming and fraught with fraud risks. While many companies are seeing their cash collection cycles increase, they are also faced with a lack of visibility into their total cash position. All too frequently, payment decisions are made without the necessary insights needed to optimize disbursement strategies with suppliers.

Perhaps most importantly, inefficiencies around cash processing often result in lost opportunities to put vital working capital to work. Fortunately, the latest cash processing solutions take an end-to-end approach to simplifying the receivables process.

With the right solution in place, companies can achieve more efficient store management while delivering provisional credit for deposits, improving cash flow and allowing treasury to access critical working capital more quickly.

Smart Business spoke with Douglas V. Wyatt, executive vice president, senior commercial banker at Fifth Third Bank, about improving cash processing.

What common errors can occur when manually processing cash?

For many businesses, processing cash payments manually is risky, prone to processing errors, labor intensive, costly in terms of time and productivity, and ties-up vital funds awaiting deposit. Businesses requiring daily deposits of cash receipts may expose employees to an elevated level of risk from theft during trips to the bank. Manual cash handling in store locations also raises the risk of theft by employees, which negatively impacts critical margins.

In addition, the time required to process cash and currency takes key personnel away from customer-facing duties, diminishing the customer experience.

Is there a better way to process cash?

One way treasury professionals can solve these cash collection issues is through a currency processing solution. Smart safe technology installed at store locations, for instance, allows employees to feed currency into the device’s note reader throughout the day. The note reader verifies the currency and automatically tracks the deposit by employee and day totals. Deposit information is automatically relayed to the bank where the organization’s account is then credited for deposit the next day.

Such a currency processing solution virtually eliminates errors and reduces the risk of theft. Because receipts are regularly collected from the device by an armored courier service, employee safety is also improved. By adding an automated cash processing solution, personnel are freed from labor-intensive deposit preparations, allowing them to focus on customer service.

How does technology increase efficiency?

Cutting-edge currency processing can transform cash collection processing, enabling treasury to achieve significant operational efficiency. Smart safe technology can speed up handling of cash and currency while automatically scanning for counterfeit bills and logging each entry. This innovative solution can help reduce both internal and external cash losses, at the same time enhancing the safety of personnel by reducing the amount of cash handling.

Overall, this solution increases employee productivity, enhances operational efficiency, lowers costs and improves margins. Further, an effective currency processing solution can enable treasury to free up idle working capital, allowing the business to better meet its strategic goals.

How might a more efficient cash handling system benefit a business?

Treasury professionals should look to improve cash handling using an end-to-end methodology. By coordinating all components of cash handling, treasury can take advantage of a currency processing solution that simplifies the receivables process.

As the cost of manual processing rises, proven, cost-effective technology solutions are becoming far more attractive. Finding the right solution starts with selecting a banking partner that truly understands your business. The provider you choose should offer solutions that are highly flexible, enabling you to meet your unique business objectives. Lastly, your provider should have the ability to design a proof of concept that ensures your targeted savings and return on investment are achieved.

Fifth Third Bank. Member FDIC.

Insights Banking & Finance is brought to you by Fifth Third Bank

How cash flow forecasting brings greater business success

When pressed to single out the most important touchstones for any business, many entrepreneurs cite customer experience, profitability and competitive pricing. Cash flow, however, should be at the top of that list as none of those other activities are possible without positive cash flow.

As anyone with a profitable bottom line knows, profits don’t equal cash flow. Cash is required to keep business operations running, making cash flow forecasting central to understanding your operating cycle. With effective forecasting, you can better manage cash inflows and outflows.

Smart Business spoke with Douglas V. Wyatt, executive vice president, senior commercial banker at Fifth Third Bank, to learn more about cash flow forecasting and its role in business operations.

What is the key to maintaining positive cash flow?

The key to maintaining positive cash flow is predictability, which requires situational awareness of your operating cycle. That can be achieved through cash flow forecasting.

While there are certainly complex and costly models for cash flow forecasting, a spreadsheet is a tried and true method. The process begins by entering your cash on hand, reviewing your receivables aging for past due invoices, then, based on recent payment history, you can estimate when you will be able to collect the funds owed to you. This analysis will allow you to see how many customers pay on a timely basis and how many are paying beyond the set terms.

How might quality issues impact cash flow?

There is a link between operations quality and finance. Some businesses grow so rapidly that delivery processes begin to lag. This can result in a poor customer experience, which in turn creates a negative cash flow situation if customers begin withholding payments because of degradation in the quality of service. Examine your processes to understand if there have been changes that impact quality that could influence your customers’ desire to pay on time.

Some businesses can be too flexible when it comes to billing. This can lead to invoices or final bills that don’t match the quote or purchase order (PO). When a customer requests a format change to your invoice, this can create a problem for the person whose job it is to match the quote or PO with the invoice. As result, they can’t easily make the connections, which in turn can cause a delay in payment and negatively impact the customer experience. To avoid this scenario, talk with customers to better understand their needs and clear up any related issues.

Why is it important to develop a disbursement strategy?

Putting in place an effective disbursement strategy to pay vendors is critical. Use of a PO system can help control expenses before the purchase takes place. POs allow you to set parameters indicating what products or services someone can buy and how much they can spend without additional approval. POs can also help a business stay on top of cash outflows and show when expenses will hit the books.

Payments via an electronic payables solution or a purchasing card program are also highly effective ways to manage the timing of cash outflows. Using such payment methods, you can schedule payments and achieve greater predictability into when funds leave the organization.

How can situational awareness be achieved?

When forecasting cash outflows, it’s important to look at when the cash flows out as opposed to the total amount of the invoice. Start the cash forecasting with your cash on hand, then add the realistic expectation of when cash will be received. Subtract the cash expenditures and the resulting number is the net cash available for the next period.

Don’t be discouraged if the numbers aren’t positive at first. It will take time to develop true situational awareness. But once accuracy is achieved, you will gain deeper insight into your operating cycle, which will have a dramatic impact on your business.

Fifth Third Bank. Member FDIC.


Insights Banking & Finance is brought to you by Fifth Third Bank

Is it time to integrate your multibank model for the cross-border challenge?

Local banks are often the smart choice for younger businesses, but taking the time to re-evaluate the benefits of a more consolidated banking structure can be overlooked as businesses mature. In particular, companies that do business overseas and work within a decentralized, multibank model can have very little insight into their overseas treasury operations.

Smart Business spoke with Chase Commercial Banking’s John Hayes about whether or not a centralized model might be right for your business.

How did the decentralized model become prevalent, and what are the challenges?

As U.S. businesses expanded overseas, many leveraged multiple in-country correspondent banks for their treasury management. This provided access to on-the-ground experts for advice on best practices, regulatory/tax environment, supply chain and trade.

While this fragmented approach seemed viable at first, many organizations realized the inefficiencies and challenges, such as:

  • Multiple relationship managers that cover each bank/region, adding to costs and time spent maintaining each relationship.
  • Lack of visibility and control into international accounts, resulting in inadequate real-time insight.
  • Multiple technology platforms and systems, which can make it difficult to manage access and control.
  • Lack of risk management, which can increase the threat of fraudulent activity.
  • Customer service models that vary from bank to bank, making it difficult to address and resolve inquiries.
  • Inconsistent pricing.
  • Decentralized accounts payable/receivable and foreign exchange management.
  • Counterparty risk.

Is a decentralized model still viable? What has changed in the past decade?

The decentralized model gave many organizations the ability to conduct business on a global scale. In the past decade, however, technology advancements have allowed for a more centralized approach to global cash management. The various proprietary banking platforms and treasury management systems provide a single platform for all banking and cash management, offering clients more visibility and control.

This centralized model also increases liquidity and efficient management of funds; accurately forecasts budget projections; consolidates documentation in a complex regulatory environment; and provides more consistent cash management.

In some instances, organizations may still require local bank accounts in various locations for regulatory and/or tax purposes.

How can an integrated banking model push a business forward?

Many international banks have invested in developing dedicated, local banking groups with decision-making capabilities and on-the-ground knowledge of the region’s consumer and logistical landscape. This model has resulted in better client communication and automation to manage multiple accounts in multiple currencies.

Integrated international banking models operate on a single platform, which immediately reduces duplication and allows for better control and more consistent processes. Over time, companies may also realize cost savings by consolidating transactions and leveraging relationships with their vendors (including financial partners) to reduce transaction volume and, in turn, the fees associated with those transactions. Additionally, there’s the advantage of access to real-time reporting and increased visibility into accounts and statements.

For example, one U.S. based client operated in 24 countries with more than 80 bank accounts and more than 15 providers. By moving to a centralized treasury structure, it cut that down to 34 bank accounts with four banking providers, saving more than $50,000 annually.

As global financial institutions improve their international services, including developing more sophisticated technology to serve cross-border clients, the gap between international and local banks delivering local expertise has closed.


Case study: Migrating from a decentralized to a centralized treasury structure



Chase is a marketing name for certain businesses of JPMorgan Chase & Co. and its subsidiaries worldwide (collectively, “JPMC”). The products and services described in this article may be offered by JPMC subject to applicable laws and regulations and service terms. Not all products and services are available in all geographic areas. Eligibility for particular products and services is subject to final determination by JPMC.


Insights Banking & Finance is brought to you by Chase

Weighing the available options for business succession planning

It’s never too early to start thinking about your ownership-transition strategy, regardless of where your business is in its life cycle.

Smart Business spoke with Dave Schaich, president of Western Pennsylvania Middle Market at Chase Commercial Banking, who provided an overview of some of the choices, in order to help you consider all the options you can pursue.

If you’re a business owner at the outset of succession planning, where’s a good place to begin?

Start by laying out all the options available to you, and make a list of the pros and cons for each. This will give you a more complete picture and should help you to align the needs of your organization with the future you envision.

What’s one option for sellers to consider?

If you don’t necessarily want to stay involved after the sale, consider selling to a third-party strategic buyer. One advantage is that sellers can leverage a control premium — this is the amount a buyer is willing to pay above the current market price of a company, usually because the buyer wants to acquire a controlling share or make changes to the cost structure.

Another consideration is maximum up-front liquidity. Strategic buyers tend to be more familiar with the business model and can more easily integrate the acquired business into their existing platform, resulting in greater sale proceeds at close.

What if the owners want to stay involved with the company after the sale? Are there some options for these sellers?

It’s fairly common, and there are a lot of options for sellers in this situation — employee stock ownership plans (ESOPs), leveraged recapitalizations or selling to a financial acquirer, to name a few.

Financial acquirers are a good option for an owner who not only wants to be involved after the sale, but also wants to continue operating the business.

Some financial buyers are looking for companies with shareholders who are active in management and want to supplement, rather than replace, the team. If you’re ready to diversify your personal balance sheet, but not yet ready to give up your place at the helm, this might be a good option.

You mentioned ESOPs. Who might find this option attractive?

Generally, after leveraging its assets to purchase shares, the company conducting the ESOP sells 25 to 100 percent of the company to its employees. This allows the owners, in effect, to sell the company to itself. This creates a lot of equity incentive — with an ESOP, all participating employees have an incentive to ensure that operations run well and the company is successful because they’re now financial stakeholders. It’s also a great tool for recruiting and retaining great employees.

Another thing to consider is tax deductions — company contributions to ESOPs are generally tax-deductible and may qualify for capital gains tax deferrals and other tax benefits to the redeeming shareholder, all of which lead to increased cash flow.

What else should be taken into account?

Owners with available time and capital might consider utilizing initial public offerings (IPOs) to shift the business from being privately held to being a public company where securities are exchanged publicly.

There are a lot of new responsibilities and compliance issues the business will face, but the big advantage is that there’s increased liquidity for shareholders. Any pre-IPO investors in the company will have the opportunity to monetize their investments as their shares take on cash value, which can be a strong exit strategy for business owners. There’s also increased growth capital. Companies undergoing an IPO receive a direct boost to liquidity and can be used as expansion capital.

Ultimately, however, every business has unique needs, and every owner wants a unique result out of succession planning. The key is to get all of your stakeholders together, and create a plan that makes the most sense for you and for your business.

Insights Banking & Finance is brought to you by Chase

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.

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