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If a solid relationship is in place and there is a good flow of information, it鈥檚 much easier to stay top of mind with your finance provider.

Paul R. Frey and Tim A. Pratt

We all like to think that we have a certain amount of control over the things in our world. Obviously, you have great influence over the manner in which your business runs, the strategy that you set, what personnel you retain, how you compensate them and what you do from day to day. So, hopefully, it won鈥檛 come as a surprise that you have more influence over your finance provider than you might think. You also have the choice to pro-actively manage the relationship with your finance provider so that it works in favor of your business objectives. As we put the most difficult years of the recession behind us, your relationship with your finance provider should be an important element of your overall finance strategy. In today鈥檚 lending environment, with opportunities on the rise and interest rates still near historic lows, a sound relationship with your finance provider may prove more helpful than ever before.

Historically, refuse haulers have not had a wide variety of lenders to choose from that have a dedicated knowledge of and interest in the solid waste industry. Now that the economy has been growing for several years in a row, lenders are looking for growth opportunities and the waste industry has become more appealing as a potential target. What this means is that there are more lenders in the market to provide the financial solutions that refuse haulers need.

Most of the company leaders reading this magazine are likely to have one or two primary finance relationships that help them keep their enterprise running smoothly. Some use one source for their traditional banking needs and another provider for their equipment finance needs. Some companies will use the same financier for both.听 But whether your finance provider is a manufacturer captive, an independent finance provider or a traditional bank, all are looking for pretty much the same thing鈥攇ood information.

Building a Mutually Beneficial Relationship

You can do a lot to build a mutually beneficial relationship by keeping your lender(s) informed about your company鈥檚 financial situation and the regional environment you are working in. As with almost any relationship, you simply give yourself a better chance at success when you keep the communication lines open. Here are a few pieces of information you can provide or action steps you can take to maximize the benefits of your relationship with your finance provider(s):

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1. A brief written history of the company. When first applying for financing, one way that you show your ability to succeed is by demonstrating that there is a history with some continuity and experience. This written history doesn鈥檛 need to be lengthy or flashy鈥攋ust show that your company and the leaders in it have a record of success.
2. Resumes of team leaders. The right people and relationships are vitally important. Personal relationships make a difference. Demonstrate that your executive team has the industry skill, stability and management expertise to be successful with a bio or resume of each person.
3. A thorough and updated business plan. Maintaining a detailed one-year plan plus a more general five-year plan is a good idea and both should be updated consistently. Detail what your goals and objectives are from year to year and how you plan to achieve them over a period of time. You may have heard this saying: If you fail to plan, you plan to fail.
4. A well-defined customer profile. Problems can arise when you get away from your target market sweet spot or if too much of your revenue is generated from a limited number of sources. That doesn鈥檛 mean you can鈥檛 be opportunistic and search for new revenue streams, but it does mean you need to be thoughtful about how you expand your business. Discuss your customer concentration and how to diversify it. You may be surprised at how much your finance provider has to offer in this regard.
5. Financial information on your company. When you share timely and accurate quarterly results with your finance provider, it helps prevent surprises. Take time to discuss your results with your finance provider and seek insight into how to position yourself for success. There are often appropriate ways to re-allocate certain kinds of debt that may be able to strengthen your balance sheet, improve cash flow and increase bonding capacity.
6. Relevant industry news. Consistently deliver news items that illustrate how your regional business environment is changing. This practice shows that you are aware of the forces that impact your business directly and indirectly.听 It also shows that you are willing to take steps to make the most of new opportunities while mitigating emerging risks.
7. Company and industry events. Extend an invitation to your finance provider to attend company or industry events. Meeting the people behind the numbers is important to us too. They may not always be able to attend and the gesture will always be appreciated.

An Important Advisor

Another way of looking at this list of suggestions is that your finance provider should be viewed as an important advisor to your leadership team and your company. Your account manager/sales representative can be much more than someone you call when things go poorly or when you need money. That person should become a resource that helps you anticipate problems and capitalize on opportunities.

If a solid relationship is in place and there is a good flow of information, it鈥檚 much easier to stay top of mind with your finance provider. That rapport will also help you overcome any temptation to delay sharing bad news. Good news often can wait. Surprises, however, can be a bad thing, so be sure to deliver bad news promptly. A lender is more likely to be able to find solutions and show some leniency if that relationship is well established and the communication lines are open.

Paul R. Frey is a senior vice president and regional manager for the Environment Services Group of the Wells Fargo Commercial Banking Group. Based in Chicago, IL, He provides strategic direction and leadership for his team, which serves the financial needs of business in the $270 billion environmental industry. With more than 30 years of experience in the environmental services industry, he has served on a White House Environmental Direction Committee. Paul can be reached at (312) 920-9171 or via e-mail at [email protected].

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Tim A. Pratt is a senior vice president and division manager for the Specialty Vehicles Group of Wells Fargo Equipment Finance, Inc. With 32 years of transportation industry experience and based in Tempe, AZ, he leads a team of equipment finance specialists that focus on the refuse and recycling industry. Tim can be reached at (480) 784-9594 or via e-mail at [email protected].

Sidebar

Quick Pickup List of Ways to Manage Your Financial Provider

1. Write out and share your company鈥檚 history
2. Provide resumes of key company executives
3. Extend invitations to company and industry events
4. Distribute relevant company and industry news
5. Share timely and accurate company financial information
6. Discuss customer concentration
7. Share bad news quickly
8. Share good news too
9. Make your financial provider an extension of your leadership team
10. Keep the communication lines open