How is PNC uniquely positioned to help manufacturing businesses?
Our business banking relationship managers are well-trained in the unique financial needs of manufacturers. Whether you’re seeking to purchase a building, raw materials or equipment, or striving to improve your cash flow and profitability, PNC bankers listen and examine opportunities to enhance the efficiency, security or growth of your operation.
Managing cash flow is a concern for many manufacturing business owners. What are some tips that may help them manage their cash flow?
Many factors impact a company's cash flow, such as elongated and/or complex operating cycles, periods of intense capital spending, and accounts payable and receivable policies. Accelerating the collection of receivables, investing excess cash effectively, and optimizing the efficiency and rewards associated with payables are essential. Having a banker you trust, who understands your operation and can recommend relevant solutions, may help you keep cash flow consistent and predictable through market peaks and troughs. Online financial reporting tools may help, too, by enabling you to monitor and analyze your account day or night.
Manufacturers should also use credit strategically. For example, consider an equipment line of credit for new equipment rather than a business credit card, which may be more expensive.
What financial blind spots do you frequently see in manufacturers?
Manufacturers often leave themselves vulnerable by:
1) Neglecting to protect their businesses from fraud. Too often, we see manufacturers invest in fraud protection tools only after they’ve been victimized, rather than proactively taking steps to protect outgoing payments, customer information and other sensitive data.
2) Overlooking digital banking tools. Routine tasks can be automated to help save time and effort, gain financial efficiencies and improve controls.
3) Postponing business savings and/or investments. Sometimes manufacturers reinvest so much into their businesses that they neglect to build adequate deposits and investments. These funds are important, as they may offer financial options in the event of unforeseen challenges or opportunities. Owners should also save for their personal retirement so they’re not completely reliant on the transfer of their business to fund their next life stage.
4) Acting before analyzing. Manufacturers who attempt to accomplish everything now and without ample financial analysis put unnecessary stress on cash flow. For example, some manufacturers max out their credit from personal sources, vendor financing and traditional banking sources to accomplish all of their capital goals at once. They then face pressure to meet their monthly obligations with no room for lost sales, bad weather or an unexpected economic downturn. Others experience a cash flow pinch due to unplanned cost overruns. It’s important to understand and plan for capital expenditure payback periods and the full costs associated with these choices.