People don’t have the time they used
to, so everyone is seeking a one-stop-shop answer for their needs. That goes
for companies, too. Why simply hold
accounts at a bank when you could also
get advice on succession planning or
taxes or treasury management services?
While many banks may present themselves as total “financial advisers,” it ultimately comes down to experience and
connections, says Mitchell Belon,
regional president of MB Financial Bank
in Chicago.
Smart Business spoke with Belon
about what makes a bank a good financial adviser.
What attributes should a company look for
when selecting a bank as its financial
adviser?
It should look for a bank that focuses
on commercial banking as its core business. A good commercial bank will have
professionals that have experience with
various types of companies. In addition,
veteran business bankers may have
experienced changing economic cycles
and have seen how they affect companies and their management.
A banker should also serve as a company’s trusted financial adviser. He or
she should have a working relationship
with both the company’s attorney and
accountant. Bankers can set themselves
apart from the competition by spending
time thinking about the company and
where the owners want it to go. A
banker should recommend proper debt
facilities and structures, depending on
the company’s sales cycle, cash flow and
asset life span.
A good relationship manager wants to
build a comprehensive relationship with
the company and its owner, and businesses need to view their financial services in their entirety. If a company is
solely focused on the lowest-cost alternative, it will suffer in the long run. It
will bounce from bank to bank and
never really establish a solid relationship
of mutual trust, confidence and respect.
When you consider all of the time and
effort it takes to make a change, you’ll
see that the costs often outweigh the
sometimes very small improvement that
may be picked up in an interest rate.
What is a treasury management plan?
A comprehensive treasury management plan will address each facet of the
cash cycle. This would encompass cash
disbursements, the collections of cash,
fraud prevention and the movement of
funds within the bank between accounts
and/or loans. A bank’s goal should be to
set up a system that runs itself, allowing
the company to do what it does to produce profits.
Cash disbursements can take the form
of checks, ACH transactions and wire
transfers. The number of ACH or electronic payments is growing rapidly
because it’s safer, cheaper, faster and
easier than mailing checks. Today, this
can all be easily controlled and managed
by the business. Paying vendors in this
manner is becoming common, and operating an in-house payroll that offers
direct deposit to employees has become quite simple. Forge-proof checks can be
purchased, and reconcilement services
that monitor incoming checks issued by
a company on a daily basis all but eliminate the chance for check fraud.
Cash collections are what keep the
company’s engine running. The goal is to
make it convenient and safe for customers to pay — as quickly as possible. A
company can outsource the grunt work
of opening payments and preparing
deposits to the bank through the use of a
‘lockbox’ service. Also, a company can
allow customers to pay smaller invoices
by credit card over the phone or Internet
with merchant credit card processing. A
company can also collect payments electronically from customers through the
use of ACH services. If a company has
multiple locations in different cities,
funds can be ‘concentrated’ or moved in
easily from other company bank
accounts to a central operating account.
Within the bank, many companies take
advantage of online account access,
which makes a wide variety of monitoring and information reporting available
at your fingertips. Any loan or interest
payment can be set up for automatic
payment on the due date. Excess cash
can be ‘swept’ automatically into an
investment account at the end of each
business day. Funds can also be swept
between the main checking account and
a line of credit.
What is succession planning?
Succession planning allows for a
smooth transition of an owner out of the
business when he or she is ready. This
may be to the next generation in a family, to a purchase from an outside company or through an employee buyout. At
MB Financial Bank, we have a team in
our Wealth Management group that
works in conjunction with the company’s attorney and accountant. They
devise an integrated approach that considers the financial, legal and accounting
aspects of the move.
MITCHELL BELON is regional president of MB Financial Bank in Chicago. Reach him at (630) 797-9047 or [email protected].