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What's in Your Tool Box?


September 24, 2020

What's in Your Tool Box?

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Tool boxes are a commonly known item and contain devices that are used for repairs, improvements and to build new things. I often refer to them when speaking with clients as we share common tools and unique ones, both of which are leveraged to enhance the relationship.  While some items are inter-changeable, it is the industry-specific ones that provide the most opportunity to maximize synergies.

The construction industry has standard instruments stored in their tool boxes; however there are many others including financial reporting/forecasting, bidding practices, collateral, cash flow, experienced management and legal and accounting support, to name a few.  While hand tools can change by industry, the other items are universally important for all companies and have an equal amount of impact on your company’s results.

Technological advances can change what’s in your tool box over time, as the instruments need to be kept up to date.  However these devices must also remain clean, accurate, relevant and applicable to the work being done.  If there are tools not being used, they are likely outdated and should be either replaced or revisited to determine their importance.  The devices used to run your business should also be compared to what your competitors are using to ensure a level playing field.  Business partners must also be aware of the tools you use, and a critical constructive analysis must be routinely completed in order to ensure maximum performance.

When looking into your tool box, you should be as certain of the items’ effectiveness as if they were hand tools themselves.  There is nothing worse than pulling an item out of the box and it does not work, is obsolete, dirty or simply not the right one.  These frustrations apply to all industries and can be avoided by routinely checking on your tools.

Your banking relationship aligns strongly with the tool box analogy, as your tools need to be used by your banker, and the bank’s tools need to be used by you.  For example, collateral, cash flow and financial strength of your company are integral items for both parties.  They can be used to develop a satisfactory financing structure in the near term with forecasting models and cash flow projections critical to meeting longer term needs.  The condition of these tools will impact how well the financing structure can be put in place, or, in other words, completing the job.

There should be synergies with your banker’s tool box too.  Cash flow needs should be supported by properly structured working capital financing and treasury management services.  Collateral can be leveraged to support growth projections, acquisitions and if necessary, a recapitalization of the company’s balance sheet.  Financial statements and forecasts must be expertly analyzed to ensure financial objectives can be met and adequately supported.

Your banker should also have industry specific items in their tool box that benefit your company.  For example, value-added services include M&A expertise, ESOP structuring, Wealth Management services, fraud prevention, management succession planning and financial bench-marking that are unique to the banking industry and must also be clean, accurate, reliable and up to date. 

I encourage you to look in your tool box to ensure the devices in it will contribute to the on-going success of your company.  Similarly, your banker should be bringing their tool box to your year-end review meeting to gauge historical as well as future results.  All of the tools should be used in order to repair what is broken, improve existing services and build financial security for the future.

William. J. Ruckert, III is Senior Vice President of Middle Market Lending at Provident Bank. Based in Provident’s Iselin office, Ruckert oversees commercial financing for companies with sales of $15 million or more. He holds a bachelor’s degree in business administration from Loyola College in Maryland.

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