The benefits of working with a private banker

Private bankers serve as a conduit between a bank and its busy professional clients.

“They are a single point of contact who act as a personal CFO,” says David Hall, vice president of private banking at Home Savings Bank. “They listen to their clients’ needs and use their experience and connections to give their clients the best financial advice and guidance regarding their unique set of circumstances.”

Typically, private bankers help their clients with deposit products and customized lending solutions. However, they also help guide clients through financial planning, investment needs, trust and estate planning and other areas of financial expertise.

In some cases, a private banker’s help can extend outside of the financial realm.

“It wouldn’t be unusual for me to help a client who lived in Ohio and was selling a Florida condo find a real estate agent and negotiate the commission and terms of the sales agreement, or help decide how to make the condo saleable and pick a contractor to do the renovation work,” Hall says.

Smart Business spoke with Hall about the role of a private banker in the lives of busy professionals.

Who should consider working with a private banker?

Busy professionals benefit the most from a private banking relationship. These people spend most of their time running their businesses and are looking for a knowledgeable banking resource to help simplify their financial life so they can focus their extra time on hobbies and family. They are experts in their line of business and are looking for someone knowledgeable who they can trust to help them manage their finances.

What is the relationship of a private banker with an individual’s other financial advisers?

Private bankers are typically part of a wealth team that should have access to a financial planner, trust planning and administration, investment portfolio management and retirement planning. They work hand in hand with them and the client’s external advisers and are not looking to replace them. Rather, their seat at the table helps busy professionals evaluate and manage their financial lives and relationships.

Once a relationship is established, what should the client expect from the private banker?

It should be expected that the private banker conducts regular financial check-ups, though their frequency should be dictated by the client’s personal preference. It’s advisable for clients to have at least an annual review of their finances, including their insurances, to make sure they are on track with their financial plan.

A client’s financial documents should be reviewed, such as their will, living will, durable power of attorney and health care powers and directives at least every three to five years to make sure they are still up to date and aligned with their goals.

Private bankers can also look after the finances of their clients’ spouses, partners and family, at the very least knowing where the finances could be found so that the appropriate steps can be taken in the event of an unexpected death.

Clients should be able to call their private banker outside of normal business hours and get a response. It will be clear that the relationship has value if the client is happy with his or her ability to transact banking in an easy and efficient manner.

What should someone look for in a private banker?

While it is good to know if a private banker has any specific accreditations, it is also important to know what experience a private banker has and whether it is diversified.

It’s good to work with a private banker who is involved in the community, serving on nonprofit boards and actively volunteering. Bankers who are active in the community are generally well connected and have a lot of resources to help guide clients in any request.

Generally, private bankers are inquisitive and not afraid to ask questions about their clients’ personal finances and goals. Bankers also need to listen to their clients’ answers and be able to help put a solid plan in place to achieve their goals.

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

How business owners benefit from using a private bank

Those who find value in the services of a private bank are typically people who have been very successful at running their business and most likely have many disparate business interests and concerns. A private bank supports these business owners as a resource to help manage the varied financial aspects of their professional, and often their personal, lives.

“Private bank clients tend to have unusual or sophisticated financial needs,” says Ted Gouza, senior vice president, private banking region manager at the Huntington Private Bank, which is part of Huntington Bank. “They’re involved at a high level with multiple companies, usually have entrepreneurial ventures such as startups, and their cash flows are different than those found in typical banking relationships.”

Smart Business spoke with Gouza about private banks, who should use them and what benefit they offer.

Why might working with a private bank make sense for business owners?

Business owners working with a private bank are able, when there is a need, to make a call and talk to one person who can quickly provide the direction and advice they’re looking for. They are connected to someone who is proactive, someone who knows them. When they call, they don’t need to explain who they are because they’re talking with someone who understands their full financial situation so that when they share information, the private banker is able to connect it to the bigger picture.

Private bank clients need a trusted adviser to call who can provide a full array of wealth management needs — loans, deposits, money management, financial and estate planning, and insurance. Private bankers ensure that all of those needs are addressed.

How does a private bank fit within someone’s existing adviser network?

A private banker becomes another aspect of a person’s financial network, serving in the role of quarterback on a financial team, connecting with a person’s existing accountant, attorney and commercial banker to help clients transact effortlessly.

A private banker doesn’t provide legal or tax advice, but they can direct clients to the right place when it’s clear a request requires different expertise. For example, recent changes to the tax law may prompt a conversation about what individual effect those changes might have. The private banker wouldn’t give direct advice on how to react, but would advocate in front of a CPA and accountant to work through the best way forward.

The benefit of a private banker is that they have knowledge of their clients’ entire financial situation — personal and business — and they’re connected to the rest of their clients’ network.

What special value does a private bank bring to a business owner?

Private bankers provide a consultative approach. They loop in the advice of additional partners to help counsel clients and identify and discuss opportunities as they arise. This applies to both the client’s personal and business finances.

A private bank is with a business owner through every stage of their financial lifecycle, whether they’re just starting a new business or coordinating a succession plan or liquidity event, and guiding them through whatever comes next.

How can prospective clients determine if a private bank can meet their needs?

During the review process, the conversation should touch on how often meetings with the banker should occur and what are the expectations for the relationship. Determine the level of expertise and capabilities of the private bank, as well as the approach taken when working with clients. The choice really centers on the client’s personal preference and the private bank’s ability or willingness to customize service to the client.

Expertise aside, it all comes down to the personal relationship. It’s important that the prospective client is comfortable with the person they’re working with and that the private banker fits well with the rest of the client’s financial team.

A private bank has the unique ability to coordinate the sophisticated financial business conducted by a select type of professional. The relationship, when working effectively, complements a client’s entire team of advisers.

Insights Banking & Finance is brought to you by Huntington Bank

How a bank can be a manufacturer’s strategic and trusted partner

For area manufacturers to keep up with the fast-paced economy, create jobs and grow in a competitive market, they need to be current with the times and well-connected in their communities.

“Manufacturers invest in the best equipment to make their products. But in order to take full advantage of that equipment, they’ve got to get customers in the door,” says Kevin Vonderau, Executive Vice President and Chief Lending Officer at Westfield Bank.

Among the many methods available to manufacturers to generate sales opportunities is a deeper connection with their bank.

“When the relationship is strong, banks can be an adviser to manufacturers rather than just providing nuts-and-bolts services,” he says. “Our connections within the community give us a broad perspective on how businesses, manufacturing and otherwise, are dealing with common issues.”

Smart Business spoke with Vonderau about how banks can help manufacturers overcome common business challenges and open a path to growth.

What are the aspects of manufacturing businesses that could be improved?
Generally, manufacturers could stand to be better marketers. One tool that they tend to underutilize in this effort is the web. It’s common for manufacturers to use the internet to find suppliers, why not use it to find sales?

Face-to-face interaction still has value, but it’s no longer typical for a sales force to go door to door and sell. Manufacturers need to better utilize the internet by creating a round-the-clock portal that’s more efficient and effective at finding potential clients.

If they haven’t already, manufacturers should build a modern website and use it to promote products and highlight recent projects. Include customer testimonials that speak to the business’s unique qualities and how they were able to solve their customers’ critical business problems.

Also, take advantage of formats where online communities can be formed — LinkedIn, Facebook and Twitter, for example. With the right approach, it’s possible to use these platforms to generate awareness and leads.

How can banks help manufacturers evolve their businesses?
Banks come into contact with many different companies, all of which approach common problems differently in the market, making a banker a centralized and valuable source of knowledge.

Bankers typically attend a variety of trade shows, are members of many industry associations and host or attend many community events. Manufacturers can leverage their banker’s experience and connections to grow their client base and expand their business knowledge.

Another key issue for banks is the fight against fraud and hackers. Banks are working to educate their clients on the tools and processes that are most effective in the prevention of fraud and mitigation of cyberthreats. It’s important for manufacturers to ensure their systems are safe so their proprietary information can’t be leaked to a competitor and that their financial transactions are secure.

What are the keys to a strong relationship between a manufacturer and a bank?
It comes down to treating a bank more like a partner than a service provider. They can help make valuable connections and uncover opportunities to grow the business, rather than just host a checking account.

Manufacturers are not unique when it comes to the challenges of common business stages, which is why banks are working to offer more education on events such as succession planning. Manufacturers should talk with their bank about the ways in which they can help them find success today and into the future.

Insights Banking & Finance is brought to you by Westfield Bank

Strong customer relationships lead to healthier businesses

You may have heard the song lyrics, “Make new friends, but keep the old. One is silver, and the other is gold.” This sentiment rings true for more than just personal relationships; it’s important in business, too. Business growth is dependent upon adding new clients, while keeping and expanding relationships with existing customers.

Smart Business spoke with Heather Wirtz, chief development officer at Richwood Bank, about how to leverage your relationships into financial success.

Why is customer loyalty so important?

Whether your company does retail sales with repeat opportunities or provides a service as-needed, customer loyalty is key for the best sales tool of all: recommendations through friends and family.

A customer might only buy a car every five to seven years or mortgage a home once, but that experience sets a memory that can provide referrals for years, even if you don’t see that customer for a decade. It’s the same for retailers that send coupons every week. If customers don’t have a great experience, feel the product was quality, like the selection etc., they’ll probably toss them out.

Treat every customer genuinely, regardless of appearance, financial status or ability. It sets the right tone to make the purchase journey a memorable one. A customer for life is possible when you make them feel as important to you as you are to them.

Where do you see companies struggle with customer retention and relationships? Why?

From a cultural perspective, your ability to build customer relationships and retain those relationships is directly tied to employee relationships and retention. The retention of customers is a lagging indicator of several efforts, but certainly if your employees aren’t engaged they won’t engage the customer. Equally, if too many faces change, your customers lose the motivation to get out of their car and see that special person.

Some companies overlook this dynamic, but it’s particularly critical when the business is built upon human interaction. To further explore this area, draw a square with customer relationships, employee relationships, customer retention and employee retention in each corner. Draw an ‘X’ connecting the corners, and then discuss the relationship of each item to each other item. By discovering where you’re weakest, you’d have one strategic initiative and deciding how to exploit where you’re strongest, you’d have another.

What other strategies can improve customer relationships?

Think about where you want to be in the relationship. When business owners work on their goals, they can try this exercise. Draw a triangle and divide it into three parts. At the bottom, in the largest base, is the vendor role. Think of the vendors in your life, such as cable, internet, Amazon, etc. That’s a relationship. The middle section is a consultant, such as a financial planner, doctor, contractor, trainer or decorator. The list is long, but all of them could move into the top of the pyramid: the adviser.

With vendors, you feel you have to decide and hope for the best with what you receive. There’s no expectations and in many situations, it’s merely transactional. With consultants, you look for their expertise and advice but still allow it to influence you or not. With an adviser, you bring the issue to them before you’ve made a decision and lean on them to guide you through it.

How do banks play a role in this aspect of business?

Many people don’t consider a bank anything but a vendor — a must-have, a transaction. But community banks should, at a minimum, be a consultant. That’s when people see value in that relationship and come to their banker with questions, possibly about a mortgage for a home they’re trying to buy, for example. The best banking relationships fall into that adviser role. Then, people would come to their banker prior to searching for a home and working out a budget, possibly even sharing their dreams of home design.

When considering your business, know where you fall in the relationship model — vendor, consultant, adviser — and if that’s where you want to be. Many businesses still thrive in the vendor box. If that’s where you fit best, then make sure that each transaction is the best experience it can be to continue gaining repeat business.

Insights Banking & Finance is brought to you by Richwood Bank

Automated payables platforms offer cost savings to those willing to switch

There are popular tools available to companies to automate their payment workflows, a presumably welcome relief to many accounts payables departments. Still, companies today tend to stick with what they know, making more than half of their payments by check.

“These are physical things that need to be printed, signed and mailed,” says Jim Altman, Middle Market Pennsylvania Regional Executive at Huntington Bank. “That’s not only time consuming, but given the technology available, difficult to monitor and needlessly costly.”

Companies looking for cost and process efficiencies are moving to electronic services — integrated payables platforms, virtual credit cards — to submit and control payments.

“Integrated payables services make vendor payment delivery, settlement and reconcilement easy,” he says.

Smart Business spoke with Altman about the effect of payment automation on companies’ accounts payables departments.

How would you characterize companies’ rate of adoption of these payment automation tools?

The rate of adoption of payment automation tools has been slow to this point largely because these services aren’t core aspects of most companies’ businesses. It’s more a utilitarian necessity. Businesses prefer to focus on activities that generate revenue, so products and services such as payment automation tend to get less attention.

Payment automation tools eliminate much of the heavy lifting in the accounts payables process and create a one-stop shop that processes payments while keeping all data, regardless of payment method, in one place.

Why does there seem to be a hesitance to change?

An integrated payables platform is essentially a website with a secure login access designed specifically for vendor payments. It features a configurable workflow process to maintain separation of duties for more fraud mitigation. Reporting is available through the interface so as transactions are made, their status is updated.

Adoption rates are high with newer companies that aren’t entrenched in a way of doing things. With older companies, the challenge is really just resistance to change — they’re hesitant to take on something that seems like a project. Finance staffs are squeezed for time, so getting them to welcome a new way of doing their jobs just seems like a task they don’t have time for. Overcoming that inertia is often tough.

However, what companies don’t take into account is that the simplicity of the new system means integration can be done in a matter of days, not weeks. The interface is very straightforward and uploading payment data is simple.

How might the integration of payment automation tools affect the costs of payment workflow and security?

A paper-based check payment system has costs for senders, such as maintaining a printer with magnetic ink and its paper stock, the cost of the mailing supplies, postage, and also time.

The manual processes and workflow are, compared to digital methods, difficult to track and control. There’s often no audit trail, especially at the transaction level. With automated workflow tools, an audit trail is automatically kept for any action taken on each payment. It’s a meaningful improvement in terms of ease of use and cost of service. It frees up time for an AP staff to take on more value-added activities.

Adding to the movement toward electronic-based systems is the need to mitigate fraud. Any check that is written should be protected with Positive Pay controls, and integrated payables services automatically provide this protection. But migrating payments from check to virtual cards is really changing the security dynamic because virtual cards have little fraud exposure.

These cards have a designated shelf life and dollar amount. They have security features that prevent them from being used just anywhere. As an added benefit, moving payments to virtual cards also bring rebates to a company that could outstrip the costs of the former manual process, effectively adding revenue to the AP department’s budget.

Insights Banking & Finance is brought to you by Huntington Bank

How a bank can be a manufacturer’s strategic and trusted partner

For area manufacturers to keep up with the fast-paced economy, create jobs and grow in a competitive market, they need to be current with the times and well-connected in their communities.

“Manufacturers invest in the best equipment to make their products. But in order to take full advantage of that equipment, they’ve got to get customers in the door,” says Krista J. Dobronos, Senior Vice President and Market Leader at Westfield Bank.

Among the many methods available to manufacturers to generate sales opportunities is a deeper connection with their bank.

“When the relationship is strong, banks can be an adviser to manufacturers rather than just providing nuts-and-bolts services,” she says. “Our connections within the community give us a broad perspective on how businesses, manufacturing and otherwise, are dealing with common issues.”

Smart Business spoke with Dobronos about how banks can help manufacturers overcome common business challenges and open a path to growth.

What are the aspects of manufacturing businesses that could be improved?

Generally, manufacturers could stand to be better marketers. One tool that they tend to underutilize in this effort is the web. It’s common for manufacturers to use the internet to find suppliers, why not use it to find sales?

Face-to-face interaction still has value, but it’s no longer typical for a sales force to go door to door and sell. Manufacturers need to better utilize the internet by creating a round-the-clock portal that’s more efficient and effective at finding potential clients.

If they haven’t already, manufacturers should build a modern website and use it to promote products and highlight recent projects. Include customer testimonials that speak to the business’s unique qualities and how they were able to solve their customers’ critical business problems.

Also, take advantage of formats where online communities can be formed — LinkedIn, Facebook and Twitter, for example. With the right approach, it’s possible to use these platforms to generate awareness and leads.

What are the outside forces in the Greater Akron market that could be considered obstacles to manufacturers’ evolution?

Not as much time is spent training the next generation of tradesmen. And given the rate of retirement of those employed in the industry, that’s an issue.

Also, according to the Bureau of Labor Statistics, Akron is seeing employment in the manufacturing segment decline. Contributing to that trend is the rise of automation and losing ground to countries that are able to produce goods cheaper.

How can banks help manufacturers evolve their businesses?

Banks come into contact with many different companies, all of which approach common problems differently in the market, making a banker a centralized and valuable source of knowledge. Bankers typically attend a variety of trade shows, are members of many industry associations and host or attend many community events. Manufacturers can leverage their banker’s experience and connections to grow their client base and expand their business knowledge.

Another key issue for banks is the fight against fraud and hackers. Banks are working to educate their clients on the tools and processes that are most effective in the prevention of fraud and mitigation of cyberthreats. It’s important for manufacturers to ensure their systems are safe so their proprietary information can’t be leaked to a competitor and that their financial transactions are secure.

What are the keys to a strong relationship between a manufacturer and a bank?

It comes down to treating a bank more like a partner than a service provider. They can help make valuable connections and uncover opportunities to grow the business, rather than just host a checking account.

Manufacturers are not unique when it comes to the challenges of common business stages, which is why banks are working to offer more education on events such as succession planning. Manufacturers should talk with their bank about the ways in which they can help them find success today and into the future.

Insights Banking & Finance is brought to you by Westfield Bank

Reduce your exposure to fraud with positive pay

Technological advances have made it easier for businesses to manage their operations and improve their bottom line. However, as technology becomes more sophisticated, businesses must be more diligent to prevent fraudulent transactions from occurring.

“Many businesses turn to their banks to help mitigate the likelihood of fraud,” says Marianne O’Connor, cash management advisor at Northwest Bank. “That’s why we’ve invested in preventative measures, like positive pay, which can help reduce the risk of fraud by stopping suspicious transactions before they occur.”

Smart Business spoke with O’Connor about how positive pay can benefit your business.

What is positive pay and how does it benefit businesses?
Positive pay is an automated fraud detection tool for business customers of all sizes and industries. There are two types of positive pay available — check and ACH positive pay.

Check positive pay matches the credentials listed on the check, like account and check numbers, dollar amount and issue date, against a list of checks previously authorized by the company. ACH positive pay is an online fraud service that allows businesses to monitor ACH debits.

With each type of positive pay service, you can return fraudulent transactions before they post to your account, which could potentially prevent devastating losses.

There is also a reverse positive pay, which allows an authorized user at your company to review checks written to your business before they post. Positive pay is an extra layer of protection between your business and customers, and it gives you peace of mind knowing the checks that are posting are legitimate. Because you can review and approve transactions quickly and easily right from your office, it can potentially save your business from the time-consuming process of dealing with a fraudulent incident.

What might hold businesses back from using positive pay?
Many businesses think having this type of service is expensive — however, thanks to evolving technology, it’s easy and inexpensive to implement. Another misconception is that it’s difficult to use. Positive pay isn’t a complicated system. Your cash management advisor will sit down and show you how it works and provide ongoing support if you need it.

Is there a specific type of business or industry that would benefit most from positive pay?
There are certain industries that are more prone to fraud than others, but none are exempt. Chances are, if you work with a computer and handle payments, your business runs a risk of being compromised. Banks have seen a significant increase in fraud over the last several years, which is why systems like positive pay are so valuable. It’s one of the best ways to prevent loss before your accounts are affected.

What role does a cash management advisor play in helping businesses understand positive pay?
As your trusted partner, your cash management advisor should have an in-depth understanding of your business and its payment needs. They can help during the set-up process and answer questions that may be specific to your business or industry.

As financial experts, they deal with a variety of payment questions and issues each day, so you should never feel intimidated to call them for help or advice.

What do you want readers to take away from this article?
While it’s true that instances of fraud are on the rise, that doesn’t mean there’s nothing that can be done to prevent it. Services like positive pay can help prevent fraud without being a burden to your operating budget thanks to its affordability, ease of use and ongoing support from your cash management advisor and bank.

It just takes a quick call to your cash management advisor to sign up for positive pay and provide your business with added peace of mind knowing you’re protected from potential costly fraud.

Northwest Bank is Member FDIC. Equal Housing Lender.

Insights Banking & Finance is brought to you by Northwest Bank

Is your company prepared for the anticipated interest rate hikes?

With interest rates still at historic all-time lows, now may be an opportune time to lock in rates on variable long-term debt, especially given the backdrop of potential rate increases by the Federal Reserve.

“Right now the market is predicting that the Federal Reserve will increase short-term interest rates two or four times this year,” says Jim Altman, Middle Market Pennsylvania Regional Executive at Huntington Bank. “The truth, however, is that no one knows what will happen, not even the Federal Reserve. Many variables can impact the magnitude and frequency.”

Traditionally, companies would mitigate interest rate risk by choosing a fixed rate loan. In today’s market, a company can employ a more customized strategy using interest rate swaps that can actively manage potentially rising interest rate costs.

Given the inherent uncertainty and volatility with the interest rates going forward, managing interest rate risk by using an interest swap or securing a traditional fixed rate are examples of commonly used risk mitigation tools. But companies should form their own risk management strategy that is developed based on their view of the market and their unique risk tolerance level.

“It should be a strategy that says, ‘This is our view of what may happen to interest rates and these are the risks we’re willing to take.’ And companies should adhere to it regardless of what rates do,” Altman says.

Smart Business spoke with Altman about strategies businesses can use to mitigate the risk of interest rate increases.

What should companies consider as they create a plan to mitigate the effects of an interest rate increase?

Risk mitigation strategy is based on a company’s risk tolerance, the amount of debt it holds and its perspective of the market. Interest rate predictions offered by market analysts shouldn’t be the only consideration because no one really knows what will happen next. The economy is global and issues outside the U.S. impact the domestic market. So companies must operate within their set risk strategy, which is based in part on what their business can handle if rates were to change.

With the company’s expected debt levels and associated finance terms in mind, determine what risks can be absorbed. The questions to ask are:

  • What is the risk to the business if rates increase?
  • What is the effect at each stage of an escalating increase?
  • How high could interest rates rise before it becomes a problem?
  • Is the company willing or able to risk that its costs will increase to that level?

Most borrowers do not delve this deep into the impact of interest rates, and it’s a simpler question: Do I prefer a level of certainty of interest cash flows or am I comfortable with the uncertainty of the future?

Once those questions are answered, then determine how to keep risk within manageable levels. Once a strategy is formed, execute on it.

How do businesses benefit from using interest rate swaps to hedge against interest rate increases?

It’s really about managing interest rate exposure. An interest rate swap is an alternative way to manage variable rate exposures and gives the borrower an opportunity to customize that exposure and risk tolerance to fit the borrower’s strategy. Whereas in a traditional fixed rate loan, the company would fix the rate on the entire loan amount, the interest rate swap allows a company to set how much floating rate exposure it wants, determine when the hedge will start, and how long it will be in place. For example, if a company is building a new facility and will take 12 months to do so, the company has the ability to set a fixed rate at closing to begin when the construction loan matures and the permanent loan begins 12 months from now, eliminating the interest rate risk between the start and end of the project.

There’s a benefit to having interest rate protection, whether that is through an interest rate swap or traditional fixed rate loan. It provides a level of certainty and allows businesses to focus on their day-to-day operations. Businesses need to think about their risks and have a strategy to protect themselves. Develop that strategy, implement it and stay true to it irrespective of what’s happening in the market.

 

Insights Banking & Finance is brought to you by Huntington Bank

Planning an exit when a succession plan isn’t an option

The one certainty any business owner has is that they cannot work forever. If, for whatever reason, forming or executing a succession plan isn’t an option, the owner should consider selling the business as part of an exit strategy.

“Selling a business requires a plan,” says Matt Leuenberger, Commercial Team Leader at Home Savings Bank. “Anything the owner can do to stabilize the business and project a strong future will be beneficial,” he says.

Smart Business spoke with Leuenberger about exit planning when succession isn’t an option.

What does an owner need to know about his or her business to prepare for an exit?

Recognizing what specific strengths of the business could be leveraged by a buyer with additional resources or capacities can help prepare the business for potential sale. Also, understanding the business’s real earnings before interest, taxes, depreciation and amortization (EBITDA) will set appropriate expectations for the owner looking to sell. That could require scrubbing the finances of the company of various personal expenses or extraordinary items that are affecting EBITDA, which will traditionally be used to drive the sales price.

The business owner may also want to consider improving the quality of financial reporting by getting audited financial statements, if they’re not doing so already.

What help can a bank offer to an owner looking to exit his or her business?

Business owners should look for a bank with a wide range of experiences in exit planning and industry contacts, such as potential buyers, successor management teams and advisers who can help with the process.

Business owners who are forming an exit plan can also benefit from peer groups of other small business owners who they can talk with, bounce ideas off and share successes and failures on a wide range of topics, including exit plan implementation.

How would you characterize the acquisition environment today?

The market for acquisitions appears to be strong, specifically for sellers. Bank financing and private equity capital are readily available for acquisitions. The primary drawback to the acquisition market seems to be finding companies willing to sell and then reaching acceptable terms for both sides.

What issues are buyers encountering when it comes to financing an acquisition?

Traditional bank financing will look at EBITDA and the sustainability of the earnings going forward. As prices increase for acquisitions as a multiple of EBITDA for certain industries, it could require additional equity or seller financing.

Depending on the amount of goodwill in the transaction, providing acceptable collateral to secure the bank financing can also be a hurdle.

What are banks doing to help buyers finance deals?

Banks work with buyers to optimize the financing structure and give them flexibility to meet their goals with an acquisition. When necessary, banks look to use available loan or guarantee programs through the Small Business Administration (SBA) to help mitigate their risks. Some of these programs can also help reduce the amount of equity required from buyers.

How would you characterize the level of awareness the market has of a bank’s ability to help with either side of an acquisition?

There is a strong awareness on the buying side because the financing piece is typically a large part of the acquisition process. However, sellers are under-utilizing their commercial banking relationships as they approach a sale event. Through a long-term relationship and thorough understanding of the business, a bank can provide insight as to how buyers are likely to view their business and what hurdles that could create for buyers trying to finance the acquisition.

Business owners should utilize their banking relationships for discussions that are more detailed than financing the next piece of equipment or their line of credit. A commercial banking team has significant experience in a variety of industries. They’ve seen the good and bad in succession plans, acquisitions and sales. Leverage that experience to arrive at the right solution for your business.

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

How to build a client experience orientation

To orient a company with the client experience means putting clients at the center of everything.

“That goes beyond your sales team,” says Michael J. Toth, Executive Vice President and Chief Experience Officer at Westfield Bank. “All employees need to embrace the focus on the clients, from front-line to backroom to boardroom.”

A client experience orientation embeds the client focus in the culture of the organization, placing it at the forefront during the entire client relationship lifecycle.

“It’s about enhancing processes and products to make them client-friendly and employees having a true end-to-end process orientation of serving clients,” he says.

Smart Business spoke with Toth about building a client experience orientation.

Why is it important to focus on the client experience?

A focus on the client experience enhances a company’s reputation in the markets it serves. It directly relates to a company’s financial success by improving client retention and new client acquisition, and establishes a feedback loop that informs all other aspects of the experience.

This approach provides opportunities to learn about competitors by understanding the expectations of the clients won from them. It also affords companies the loyalty and patience of their clients when things don’t go exactly as planned.

Further, value and experience become more important to clients than price, which leads to increased profitability.

What are the key elements of a client experience orientation?

It’s important to define minimum standards for interacting with all clients, ensure that end-to-end processes are client-friendly and offer the support clients need, when and how they need it.

Products should be designed with the most important clients’ needs in mind and client feedback integrated into the company’s investment road map for new technology, processes and product enhancements. Progress is mapped against client satisfaction measurements, which should be included in employee performance expectations.

Companies should align their best people with their best clients, which means involving the executive team. The best clients deserve to know the organizational leaders who are shaping the direction and the culture of the organization. Help clients get to know leadership through articles, videos and in-person introductions.

Also, share stories of client successes internally — the times clients have been delighted and service exceeded expectations, but also times when service fell short.

How is the orientation developed?

The client experience orientation starts from the initial client interaction. Relationship owners and teams on both sides should talk to understand expectations, find alignment on the relationship objectives, define the metrics and measurements of progress and a plan for the frequency of interaction — too frequent can be just as harmful to the relationship as not enough.

Leverage everything learned to understand the trends and insights about all clients, and incorporate this data into product and process refinements.

Who should be involved in developing the client experience approach?

The client experience is part of the culture of the organization, so the entire leadership team needs to be involved. Management must buy in and become the advocates who push the focus into all parts of the organization, and reinforce it through their actions and recognition. From there, all employees and stakeholders need to embrace the focus, including vendors. They are an extension of an enterprise and need to have the same client experience focus.

How does an organization know the client experience strategy it created is working?

Metrics and measurements will show that client satisfaction is improving. Client acquisition and client retention improve, and both clients and employees are proud to be aligned with the company, share their pride and be advocates for the company.

Spend time talking with staff about the expectation for the client experience. If that differs from the experience they receive today, create a plan to close the gap.

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