Small businesses are often characterized as too small and too simple to want, need or understand the potential benefits of Treasury Management (TM) products applied to their business. However, the pandemic has caused many small businesses to focus on operational efficiencies, improved cash flow, including cash management related services.
As the needs of small businesses evolve during the pandemic, banks can employ creative approaches to meet their customers’ cash requirements.
Small Businesses Make the Jump to Online
Pre-pandemic, lots of small businesses were still conducting much of their banking business in-person. But when COVID-19 upended the world, it was impossible for some business transactions to go on as usual. Many bank’s lobbies were closed, so popping in daily to deposit checks was no longer an option. Nor was chatting with friendly bank staff to get help on much-needed loans such as Payroll Protection Program (PPP).
The pandemic and ensuing PPP loan process brought small businesses who hadn’t engaged in online banking to do just that as PPP loan applications must be made online. The process gave validation to digital banking for many who were not previously there. Social distancing and lockdowns necessitated that businesses who had not transitioned to online banking to now switch to the digital world.
Banks experienced acceleration in digital banking. Even though restrictions are lifting, small businesses are expected to continue digital engagement to remain safe yet and efficient.
More Open to New Ideas and Guidance
Pivoting is one of the words we all associate with 2020. Business owners were forced to move quicker and be more agile to survive in the challenging environment created by the pandemic. Businesses had to pivot to new ways to serve their customers, keep their customers and employees safe, and secure products from their supply chains. Often these changes significantly improved business processes, opening their eyes to new ideas and guidance to further improve business efficiencies. Business owners are reimagining how their business will operate in this new normal.
Having built relationships with small businesses during PPP loan processing, banks are positioned as a trusted resource to guide them through new endeavors.
Cash Flow Optimization
New ways of doing business frequently require fast access to cash. Knowing exactly how to track what receivables and payables a company has and what cash is on hand is essential to sustaining operations, especially when undergoing change. Whether thriving or otherwise, managing cash flow is an area that tests many small business owners. Tasks such as managing ACH payments, payroll, and online customer payments are often out of the core competencies of business owners.
Treasury Management solutions can help businesses effectively manage daily liquidity. Payment integration, disbursement solutions, online banking, payroll, and reconcilement solutions boost operating efficiencies. Until now, most small businesses were not even aware that these solutions exist.
Enhance Treasury Management Engagement
Small businesses’ circumstances will continue to evolve as we come out of the pandemic. Bankers must converse with business owners to understand how they are reengineering their businesses. They need to be ready with solutions that enable their customer’s financial wellness. But sometimes, with so many treasury management products available, some banks offer 50 plus, the commercial banking team struggles determining which products to recommend.
By engaging in deep conversations, digital and in-person, that address relevant topics around the structure of their business, including partnerships, vendor relationships, percent of online business, method of payments, reporting requirements, etc., commercial and treasury management staff can gain a true understanding of their clients. With dynamic conversation guides, bankers can have respectful conversations that enable them to know precisely what a business’ circumstances and objectives are, including maintaining sufficient liquidity, optimizing cash resources, accessing financing, managing investments, implementing streamlined payables, and reducing risks.
With small businesses taking on new priorities, capabilities, and attitudes, they will invest in and modernize their operations. Ensure your commercial team has deep dynamic conversations so they can recommend solutions to optimize cash and keep it flowing.
