Cash management

or Register to post new content in the forum

16 RepliesJump to last post

 

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Jul 30, 2006 7:09 am

When I was a rookie, I used to cold call business owners and pitch the firm's business checking account.  I found that it was an easy call to make, a harmless product (i.e. no risk) and was a good door opener.  As a rookie I received a 50 bps bonus on all new assets if I surpassed a certain level, so that was my motivation.


I still have many of those accounts to this day.  Some have blossomed into good accounts, some never went beyond a checking account.  I received a call last week from one of the accounts; they are wiring in seventeen million (sale of a property) for me to handle (cash management) and want me to take over a substantial pension account (they are unhappy with the current MF provider).  All from a cold call a number of years' back.


I'm thinking about starting a prospecting campaign for cash mgmt once again.  Anyone out there doing this and having success?  Do you pitch ARP's? I'd appreciate some input.

Jul 30, 2006 9:16 am

I can't say I 'push' cash management, but I do mention it when I meet business owners.  Every once in a while, the owners' ears go up like a jackrabbit, and I know that he hasn't a clue about his cash flow.


As you say, it's a good segue into the corporate books.

Jul 30, 2006 4:15 pm

Tj,


I have also begun to call on small business owners in regards to cash management strategies. Since ML is not a bank, I really dont go after the operating accounts, I try to pitch them on the reserve accounts... I have also been mentioning VRDO's and R-Floats when I call, because they offer attractive tax free yields and most business owners havent heard of them...


Historically, I have called on residences and two select niche markets, but found that those areas tend to have long lead times... In the past month I have added business calling to the list and, although I have yet to close a cash management account, the potential in just 5 weeks is exciting!!!!!!

Jul 31, 2006 2:58 pm

Own the cash flow - and you own the relationship.  Great prospecting idea to attack the cash market.  Stat:  If I manage your cash, I manage 80% of your assets.


Blarm - I think we may actually agree on something!!

Jul 31, 2006 10:31 pm

how do you call these people...what is your script.  I have only called on seminar and that was a few years back though

Jul 31, 2006 10:46 pm
apprentice:

Own the cash flow - and you own the relationship.  Great prospecting idea to attack the cash market.  Stat:  If I manage your cash, I manage 80% of your assets.


Blarm - I think we may actually agree on something!!



Are you trying to say that the average business owner has 80% of their assets in cash?

Aug 1, 2006 9:34 pm

Again...any script suggestions?

Aug 1, 2006 9:37 pm

MR. JONES



Are you earning 4% on your checking account assets?



That should work very well.

Aug 2, 2006 9:03 am

JoeD - what the statistics say is that if a client has a cash management relationship with you, they'll typically have 80% of their investable assets with you.  It's the cash management relationship that really locks you in as that 'primary' advisor.


Business owners are typically cash poor.  They struggle with the fluctuating nature of their day to day cash flow.  Small business owners typically view their business as their 'mono-portfolio'.  Strategy #1 with small business owners: Figure out a way to help them better run their business - short term notes, healthy money market options, etc.  There are even County Business Owner clubs, or small business CEO groups where business owners and business leaders (small business) meet quarterly to talk about surviving as a small business and how to get the city councils to help their cause.  Most of these groups are not public - but find a way to speak to one, and you're on your way.

Aug 2, 2006 10:36 am

One service I have been pitching is our Loan Management Account- its the best in the business, and most firms do not have this capability (UBS does though).... Basically, a small business owner can borrow against the securities in their portfolio for cash flow, purchases, etc.


Benefit to them- they have an interest rate based on the total loanable securities value, not the outstanding balance. Say they have $2M, of which 800K is cash and the rest is in MF's for income. They can borrow say 50% of the MF portfolio without disrupting the MF strategy, and use the funds for everyday needs. The balance can then be repaid, or let the balance simply accrue interest.


It has been very well received....

Aug 10, 2006 4:50 pm

How do/did you find your prospects with heavy (>500k) cash that they weren't running checks through each month?

Aug 27, 2006 5:09 pm

Do you not get 'known for cash' if that is all you manage?  I know a few guys who do mostly 401k business and they said that they go after the hardest assets to get first (usually the company 401k) and then they somtimes get cash (which doesnt pay sh*t anyway) and then possibly the personal account..

Mar 21, 2011 12:43 pm

I am starting to use this strategy as a first conversation with business owners, and have found them much more receptive than trying to pitch retirement plan services initially.  Of course the goal being once a cash management relationship is established, going after retirement plan assets.  Anyone else out there using this type of strategy?

Mar 21, 2011 12:48 pm

SB, you'd better make sure your firm is going to support you in this process. It is a low gross, long devp time, and you run the risk of being on the wrong side of mgmt. I can just see some of my former bosses right now... There is very, very little patience in the world today for long term biz plans. But, I actually really like the idea, but a fella better make sure he gets some decent biz with it as you're going along. Also, can YOU afford it? 

Mar 27, 2011 11:29 am

First... I'm only in for a year, so here's what I claim to REALLY know... NOTHING!

However, having come from a long career in commercial finance, offering access to business capital is a great conversation starter.  Small business owners are still being turned away from the bank at record numbers.  Access to capital is one of their hot buttons.   Hotter than planning... hotter than munis... hotter than a hot stock tip. 

Try this... 

"I manage investments for small business owners, but with a STRONG emphasis on getting you set up with a low-rate line of credit, in your business name, that doesn't have anything to do with your financial statements or personal credit report... do you have a minute to talk?"

You'll find out quickly if they have any money (lots don't)... and go from there.  If done correctly, it makes moving their investments to you an afterthought that is just part of what they need to do to get access to capital.

Apr 16, 2011 10:25 pm

[quote=UhOhWhatNow]

First... I'm only in for a year, so here's what I claim to REALLY know... NOTHING!

However, having come from a long career in commercial finance, offering access to business capital is a great conversation starter.  Small business owners are still being turned away from the bank at record numbers.  Access to capital is one of their hot buttons.   Hotter than planning... hotter than munis... hotter than a hot stock tip. 

Try this... 

"I manage investments for small business owners, but with a STRONG emphasis on getting you set up with a low-rate line of credit, in your business name, that doesn't have anything to do with your financial statements or personal credit report... do you have a minute to talk?"

You'll find out quickly if they have any money (lots don't)... and go from there.  If done correctly, it makes moving their investments to you an afterthought that is just part of what they need to do to get access to capital.

[/quote]

Is this strategy proving profitable?