Banks Can Grow SMB Relationships with Better Financial Management Tools

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New Palo Alto Software report identifies opportunities for banks to increase monthly revenue and lifetime customer value by getting ahead of credit needs

Most small businesses can’t track and manage their cash flow because banks don’t provide them with the right financial tools, according to a new report released today by Palo Alto Software.

The white paper, titled "Planning and Management Technology Can Increase the Lifetime Value of Your Business Customers,” outlines how financial institutions can be more proactive about helping SMBs remain cash-healthy. According to Barlow Research Associates, more than 60 percent of small business owners say cash flow is a monthly concern, but only 41 percent think their primary bank effectively meets their credit needs.

Because most small business failures are caused by poor cash flow, the white paper recommends that financial institutions provide more strategic tools and advice to help business owners better forecast their credit needs. When small businesses run out of cash, banks lose customers, yet banks don’t typically focus on retention where the emphasis is to foster a mutually beneficial relationship.

“Decreasing fee income has become a major pain point for financial institutions, but they haven’t addressed the most promising ways to bring in additional revenue,” said John Barlow, president and owner of Barlow Research Associates. “Small businesses are the core of our economy, and their success should be a priority. Our data reinforces the need for a bank to provide tools to help their small business customers better plan and manage their growth.”

Barlow Research found that 63 percent of SMBs would take advantage of a tool to help them track and manage cash flow, meaning banks have an opportunity to better serve small businesses by going beyond basic services like automatic bill pay and automated bookkeeping. The white paper outlines several steps banks can take to keep an eye on financial metrics and foster relationships with small businesses, including:

● Offering monitoring tools that give small businesses advance notice of cash flow issues six to 12 months ahead of time.
● Helping business owners keep track of the right metrics against their strategic business plan.
● Integrating banking and accounting software, preferably in the cloud.
● Alerting SMBs when they become eligible for different credit products that will help them manage their cash flow.

Financial institutions also feel the disconnect. Palo Alto Software spoke with 25 account officers at banks who all said they would better serve SMB clients with advanced notice of upcoming cash flow issues. By offering businesses a tool such as LivePlan, financial institutions can help their SMB customers identify and address cash flow problems well before they start bouncing checks.

“LivePlan is mutually beneficial for SMBs and banks because the tool helps build relationships,” said Sabrina Parsons, CEO of Palo Alto Software, maker of LivePlan. “The platform serves as a common ground through which financial institutions can demonstrate their dedication to a business’ goals, which will increase customer engagement and retention.”

To learn more about the findings, download the white paper here.

About LivePlan

LivePlan is a SaaS (software as a service) solution for business planning and financial management. LivePlan is made by Palo Alto Software, Inc., developers of tools and content resources for small businesses and entrepreneurs. LivePlan is the #1 selling business planning software in the world and helps small and midsized businesses pitch, plan, manage, and grow their ventures. Palo Alto Software has been the market leader in its category for over 15 years, has served well over 2 million entrepreneurs, and has customers in 180 countries. Founded in 1988 by business planning expert Tim Berry. Sabrina Parsons has been the company’s CEO since 2007. Palo Alto Software is a privately-owned corporation based in Eugene, Oregon.

About Barlow Research Associates

Barlow Research Associates, Inc. (BRAI) was founded in 1980 to provide research and consulting services to the financial services industry. BRAI specializes in custom research and strategic consulting, with full quantitative and qualitative capabilities, including customer panels. As a top research company serving many of the largest banks in the United States, BRAI continuously tracks normative data in their Small Business, Middle Market, and Digital Business Banking syndicated research programs. BRAI’s experience allows the company to select the methodology that will provide clients with the most useful findings and in-depth analysis.

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