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The Guide to Choosing the Right Banking Partner

Tackling the startup world hits founders and early business owners with a challenge – a shortage of resources and manpower. In the startup hustle, entrepreneurs take the helm, managing crucial tasks such as shaping business models, marketing, fundraising, handling contracts, payroll, and tax duties. It's a balancing act that underscores the varied demands essential for business growth.

As businesses grow and hit their stride, the possibility of bringing in specialists for specific roles opens up. However, making adjustments to initial decisions proves resource-intensive, pulling talent away from the core business focus. A major worry for business owners is making the right call on a banking partner early on to dodge the hassles and costs of switching banks later. So, we're here with some user-friendly tips to help you pick the ideal banking sidekick, avoiding potential roadblocks and financial headaches in your company's future growth.


Understanding Your Business Needs

Every business, like a fingerprint, is unique with specific needs aligned to its distinct business model. Take a winter gear store, for instance – it usually needs a line of credit to handle the cash flow ups and downs during different seasons. On the flip side, service providers, who bill clients after hitting project milestones, deal with costs while waiting for payments, so they often need a line of credit to keep the cash flowing.

Now, think about Software-as-a-Service (SaaS) companies – they get payments upfront, but they often need a hefty chunk of change at the start for all that research and development jazz. These examples shout out loud about how different businesses have different financial needs. Recognizing and tackling these needs head-on is key. And it's just as vital to team up with a banking buddy who gets what makes your business tick. Most banks have their niches, so teaming up with experts in your field ensures you get financial solutions that suit your style.


Prioritizing Your Financial Needs

Once you've found banks with the right know-how for your money matters, it's time for a serious check. Prioritizing what really matters kicks in, thinking about what's most important. Here's a useful list of things to think about when picking your future banking partner:


1. Does your bank provide debt to companies in your sector/stage: Talking about financing and the best type of debt for your business deserves its own blog post. However, for businesses eyeing growth and smooth operations, securing capital often means tapping into debt to meet financial requirements. Whether the need for debt arises now or later, having a banking partner capable of offering tailored debt solutions is not just important; it's a lifeline for your business's financial health and sustained growth. Building this financial alliance ensures you have the necessary support to navigate the dynamic landscape of business expansion with confidence.

2. Does your bank offer treasury management services customized for your business: It is crucial to reiterate that each business holds distinct requirements, and this holds true for treasury management. Understanding if your bank provides insured cash sweep accounts to safeguard deposits exceeding the FDIC limit ($250,000), their measures to shield against fraudulent transactions, ACH and wire transfer limits and capabilities, as well as services for overdraft and cash management, foreign transaction abilities and associated limitations, should be central to your decision. These aspects contribute substantially to ensuring a robust and secure treasury management system tailored to meet the unique needs of your business.

3. Considering the costs: Consideration of the costs beyond nominal fees is a necessity. Beyond service charges, it is vital to examine additional costs, such as potential penalties, overdraft fees, wire transfer charges, or costs linked to maintaining minimum balances. Assessing interest rates on loans, the yield on deposits, and the various tiers of accounts can significantly impact a business’s bottom line and extend runway. Equally vital is comprehending the total cost of services provided, including those related to international transactions, currency exchanges, and other financial products. A comprehensive understanding of these costs ensures an informed decision aligned with your business’s financial health and objectives.

4. Considering the relationship management team: Building a solid connection with your banking partner goes beyond just transactions; it's about creating a supportive alliance. Look for a bank that values personal service, gets what your business needs, and crafts solutions just for you. Having a proactive relationship manager is like having a financial guru who can give strategic advice, foresee future needs, and tweak services as required. Smooth communication, quick responses, and a go-to person for questions or worries keep things running seamlessly. Trust, reliability, and a partner who gets your industry's ins and outs make for a mutually beneficial relationship, ensuring not just financial support but a lasting partnership that fuels your business's growth and success.

5. Online banking platform and technology: An efficient online banking system should offer user-friendly interfaces, robust security measures, and seamless integration with your business operations. Advanced features such as mobile banking apps, automation, and real-time transaction tracking enhance convenience and efficiency. Compatibility with evolving technology ensures scalability as your business grows and optimizes financial management. A banking partner with a tech-forward approach signifies a commitment to facilitating the financial agility and success of your business.


Closing Thoughts

Choosing the right banking partner is a game-changer for a business's growth journey. Considering the many challenges startup owners face, picking the perfect partner requires a sharp understanding of your unique business style. It's about recognizing your financial needs, prioritizing what matters, grasping the costs involved, and embracing effective relationship management. Your ideal banking partner isn't just about money; they should also excel in your business’s sector and offer smooth online banking experiences. By carefully looking into these factors, you set the stage for a partnership that not only meets your business needs but propels lasting growth and success.


About Cambridge Trust - Cambridge Bancorp, the parent company of Cambridge Trust Company, is based in Cambridge, Massachusetts. Cambridge Trust Company is a 133-year-old Massachusetts chartered commercial bank with approximately $5.45 billion in assets at September 30, 2023, and a total of 22 Massachusetts and New Hampshire locations. Cambridge Trust Company is one of New England's leaders in private banking and wealth management with $4.3 billion in client assets under management and administration at September 30, 2023.


Questions about Cambridge Trust? Reach out to their team:


Sep Salimi - VP, Debt Financing Solutions

Conor Murtagh - Sr. Associate, Innovation Banking

Matt Dunbar - VP, Innovation Banking

Carter Hawthorne - Sr. Associate, Innovation Banking

Christopher Roy - Director, Innovation Banking

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