from Joseph Pisani, National Manager of Franchising Services, Bank of Montreal.
Time and money are two of the most precious commodities for any business. However, in today’s demanding environment, as business owners find themselves having to work harder and smarter to keep up with the pace, some tend to overlook the fact that their local financial institution (“the bank”) is more than just a provider or safe keeper of money.
Today’s banker has access to a wide range of information and resources and can help businesses manage their overall financial affairs more effectively. With each new year, Banks continue to make great strides in developing and customizing products and services to meet their customers’ ever increasing financial needs and requests. However, with so many financial products and services offered by the Banks, it is not unusual for a business owner to be overwhelmed or confused by it all. The challenge for a business owner is how best to stay in touch without experiencing information overload.
What should a business owner do?
First, they must recognize and accept the fact that they cannot afford to stand still and do nothing. We are no longer in a “one size (one service) fits all” business environment. Each individual business, while having its generic or common banking needs, probably has some specific needs and/or preferences with regard to its banking and financial management. Business owners must take the time to identify them.
Secondly, accept the fact that the only person who is ultimately responsible for ensuring that the business’s financial management needs are being met, in the best and most cost effective manner, is the business owner themselves. This is not the role of the banker. In an ideal world the banker would always have the time and resources to stay familiar with all his/her client’s banking/financial management needs. So, whenever a new product or service was introduced that matched a client’s needs, the banker would let them know. However, as we all recognize, this is not always possible or practical. Most certainly, a business banker should be there for advice and answers, but it is still incumbent on the business owner to know the facts and ask the right questions.
Third, when it concerns the flow and use of money – accounts receivable, accounts payable, investments, cash, operating expenses, etc.- a business owner must be committed to periodically reviewing the company’s ongoing needs and processes. The financial management strategy that worked for the business last year may not be the most effective solution today.
For some business owners, their periodic review of banking arrangements almost exclusively focuses on loan interest rates and service charges – the presumption being that if one gets a “really good” rate or manages to reduce their fees, then they must have a good banking arrangement.
We would suggest that there is far more to be gained in the long term if a business owner or manager were to place more emphasis on the overall role that their bank can play in helping the business achieve its goals rather than just focusing on one item or product. It is important to explore as many options and opportunities as possible in order to improve operating efficiencies (for both the business and the bank) and to look for ways to effectively manage the operation’s cash flow. There just may be a better way…but if you don’t look for it… you won’t find it.
Where does one start in the financial review process? Quite simply, anywhere you want. We would suggest you initially focus on what aspects of your current financial management practices or needs concern you the most or what aspects present the most headaches. Is it bank line-ups or service charges, collecting receivables, banking hours or convenience? If something is of concern, identify the specific issue so that, in turn, the bank can provide the specific solution.
For example, bank service charges are always an interesting subject for discussion. Some customers prefer to pay on a per item/per transaction basis while others prefer an all-inclusive fixed fee. There are pros and cons to both but many business owners have not taken the time to investigate which is best suited for them. They readily identify with the cost but lack information to substantiate the value. As previously mentioned, Banks recognize that not all products suit all customers all the time. For most businesses, flexibility is important. Most Banks provide a number of Everyday Business Accounts that address this very subject. Each represents a package of specific services, user conditions and fee structure. The objective, of these plans, is to provide the business owner with options and flexibility more in line with their specific needs and price points.
Finally, it should be emphasized that bank product lines are always being enhanced and extend well beyond routine deposit services. Whether it is the electronic collection of accounts receivable or helping businesses provide its customers with purchase options through POS Debit/Credit Card etc. (cash is no longer king) or payroll services and banking electronically – these services provide the business owner with opportunities to save money, save time and improve their financial management efficiencies. At the very least, business owners should review their banking arrangements annually.
Effective financial management is one aspect of every business that deserves the owner’s personal attention. There is much to be gained by staying in touch with the bank on this subject but it does take some time and effort and may possibly even cost a few dollars, in either the form of cash or manpower. Nevertheless, it will be time and money well spent and a far better alternative to doing nothing at all.
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Joseph Pisani has been in Commercial Banking for over 12 years. Joseph joined the Bank of Montreal’s Franchising Services Department in 2006. His past experiences include roles as Commercial Banking Account Manager, and operating a small business. Based out of Toronto, Joseph’s role as National Manager Franchising Services consists of identifying, developing and managing a portfolio of financial service programs aimed at facilitating financing and cash management products for selected franchise networks.
Phone: (416) 927-6025