When the owner of a prominent local
moving and storage company approached Brentwood Bank’s Joe Verduci for a significant cash withdrawal so
drivers could pay for gas, Verduci had another idea in mind. Why not distribute debit
cards instead of cash?
“The owner can control what is being spent
and track it easier on a day-to-day basis,” says
Verduci, assistant vice president and retail
banking manager. “Drivers can lose cash or
spend it on other things.”
At first, the owner was wary of debit cards.
A common misperception is that distributing
company debit cards to employees is like giving them permission to spend indiscriminately. But, as long as controls are put in place,
debit cards can save the company controller
valuable time.
Verduci discussed with Smart Business
other ways to optimize financial operations
by providing dos and don’ts to help improve
efficiency and overcome business growing
pains.
What are the greatest concerns that business
owners express when you call on them?
One of the biggest complaints has to do
with the expense associated with accepting
credit cards from customers. Merchant processing fees are a major expense for business
owners, particularly those in the retail sector.
Some merchant service companies operate
like brokers — they are middlemen that
charge fees for ‘connecting’ the business with
a merchant services program. Other programs allow business owners to work directly with the processor. There is no middleman
and, therefore, no middleman fee. Do negotiate terms with merchant services representatives, and look at perhaps even cutting out
the middleman if there’s no direct benefit to
you.
Another issue related to merchant processing fees is that business owners tend to ask
processors, ‘What’s the rate?’ But the rate
doesn’t include extraneous fees, and these
add up. Also, there are costs associated with
processing cards that offer ‘points’ programs
and other clauses that get hidden in a contract that you should discuss with a processor before you sign on. Do plan for merchant processing fees because they are a reality of
doing business with today’s plastic-carrying
customers, but don’t allow fees to slip
through the cracks by neglecting to read the
fine print carefully.
Remote capture is an en vogue service in the
banking world. Is it everything it is made out
to be?
Remote capture is a valuable service for
certain business owners. Those who benefit
most from the service do not have the time to
make daily deposits during bankers’ hours,
or they are not located within a convenient
distance from a bank. For example, one
owner who travels the region to call on customers stops at his office at the end of each
business day. His assistant sets aside all
checks received, and the owner takes them
home where he has a remote capture tool
that allows him to scan all checks. Deposits
are made through the Internet at the owner’s
convenience.
Others may benefit from either a lockbox
account or even an Automated Clearing
House (ACH) account, which allows electronic transfers to be made on an automatic
basis. One of our clients owns 1,200 apartment units and collects monthly rent from each tenant this way. Tenants agree to pay
electronically, which saves the property
owner from having to wait for the checks to
arrive to deposit them.
What is the best way to fund growth in the
current economic environment?
The refinancing boom may be over, but
keep in mind that rates are still low and show
no sign of moving anytime soon. Now is still
a great time to consider consolidating loans,
refinancing commercial mortgages, or investigating other financing avenues.
The way not to fund growth is through
cash. You must always keep rainy day money,
otherwise, you’ll end up digging yourself in a
hole if unplanned expenses arise and you
have already spent your cash on capital
improvements. Do consider refinancing debt
if growth is causing growing pains, since
rates are still low.
What other misconceptions do you find are
common for the business confronting
growth?
First, don’t assume you have to settle for
off-the-shelf solutions from your bank.
Second, do give your banker as much info as
possible about your situation. Rather than
pigeonholing your needs and prescribing the
product-of-the-month as a solution, if your
banker has hands-on, real-world experience
and is worth his or her salt, he or she can
often customize a solution to help you better
manage your cash and other financial
resources. On paper, products and services
all look pretty much the same — it’s how they
can be applied to your unique situation that
will ultimately set them apart.
Finally, don’t fall for the ‘bigger is better’
trap. The best solution isn’t the biggest solution, it’s usually the one that’s the most
expertly tailored to suit your business and
serviced according to your unique needs. In
banking, size is never a substitute for service,
and there is no substitute for experience.
JOE VERDUCI is assistant vice president and retail banking manager for Brentwood Bank, Bethel Park, Pa. Reach him at [email protected] or (412) 409-9000.