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Keys to a Strong Banking Relationship

Bill Carlino 06.01.2011 | Accounting Today

CPA firms, financial institutions forge product and services alliances 

The relationships between the nation’s banks and CPA firms has at times been both competitive and profitable.

Some practices view banks and financial institutions as a rising threat for providing accounting-centric services, while other firms have enjoyed long-established relationships with lending institutions in terms of small-business client referrals or products.

As evidence of those disparate stances, Bank of America Merrill Lynch is actively courting CPA firms via its CPA Resources program, which includes complimentary CPE courses, and avenues to client services such as treasury management, leasing, credit lines and card solutions. 

By contrast, software provider Intuit's recently released 2020 Report, which focuses on demographic, social, economic and technology shifts that will shape financial services over the next decade, stated that customers — particularly those in small business — will begin to demand more services from their financial institutions, including many of those that CPA firms are currently offering. 

"Due to regulatory and industry changes, banks and other financial institutions are looking for new markets. Our research shows that financial institutions see value-added financial management products and services for consumers and small businesses as key growth opportunities," said Steve King of Emergent Research, which partnered with Intuit on the study.  "As they pursue these markets, they will increasingly compete with CPAs and other financial professionals." 

Paul Stahlin, the 2010-2011 chairman of the American Institute of CPAs, who also serves as regional president of Skylands Community Bank in Chester, N.J., a regional lender with 27 branches in north central New Jersey, admitted that, while there is some services overlap between banks and CPA firms, he views it as more of a relationship of co-existence.  "There’s plenty of work and business out there for everyone," he said.  "CPA firms are great sources of referrals for us.  We call them 'centers of influence.'  They know the financial situations of their clients, and bankers know that they can rely on the quality of information that they receive from the CPA." 

Regardless of a firm’s position on bank alliances, nearly 40 percent of Accounting Today's 2011 Top 100 Firms reported year-over-year revenue increases with banking and thrift company clients. 

"Bankers have an understanding of the CPA profession," said Gavin Geraci, senior vice president of business banking at Pittsburgh based PNC.  "And we look at how to support them.  We make firms aware of what we offer and they communicate that with their clients.  With CPAs, we need to consider what are the key triggers the CPA firm would consider to make a referral to us.  Are they a newcomer or established performer?  Many CPA firms are regional and we look at their footprint in different sectors.  We have dedicated sales teams in health care, agriculture and manufacturing, and we appeal to CPA firms serving those niches." 

"The bank hopefully is part of the client-management team," said Tony Cucci, an audit partner at New York-based CPA and business advisory firm Berdon.  "What I try to stress to the client when we are dealing with a bank is communications, whether it’s good news or bad. When a client calls and says, 'I can’t make payroll this month; what can you do for me?' — that’s not a call that anyone wants to hear. Bankers don’t like surprises. But they want to know what's going on up front." 

Paul Schuldiner, senior vice president and business development manager at the Purchase Order Finance Group at Wells Fargo Capital Finance, is a former practicing CPA who actively networks with the accounting community, attending banking/CPA-themed events, as well as trade shows around the country in verticals such as staffing, apparel, house wares and government contracting. 

"We work with CPAs, attorneys and intermediaries, and try to evaluate when a client has unconventional needs," explained Schuldiner, who revealed that the bulk of clients that he works with generate revenues between $5 million and $75 million, with the largest in the neighborhood of $200 million. 

Schuldiner oversees Wells Fargo’s purchase order finance product, a proprietary inventory financing solution that targets wholesalers, importers or manufacturers — anybody buying or selling a product — that cannot obtain traditional credit from their existing lender.  "Many of them may have obtained large orders from a Wal-Mart or Costco, and their banks may have told them that they lack the required collateral for additional financing," he explained.  "The CPA firm can then refer their client to us.  If the product doesn’t fit, then maybe we suggest something else, like mezzanine financing." 

The AICPA’s Stahlin explained that his Skylands Bank adopts a grassroots strategy with regard to CPA networking: "Community banks like ours are all about relationships.  We go out and meet the firms and get to know the partners, how they operate, how they audit — basically, their way of thinking." 

"What we often see is CPAs recommending bankers, not necessarily banks," said PNC’s Geraci, who added that the lender works through state CPA associations like the Pennsylvania Institute of CPAs.  During tax season, he said that PNC will deliver fruit baskets to CPA firms, as well as host a series of webinars that are eligible for CPE credits. 

"We work to build a dialog, to be out there in the CPA community.  There’s a lot of regulation lately and, as a result, a lot of new products that may fit with the needs of a CPA client," he said.  "For instance, the Small Business Administration recently came out with something called a 504 Refinancing Program.  We let CPA firms know that if they happen to have a small-business client with a maturing loan, this may be a product for them." 

Berdon’s Cucci said that he looks at his relationship with his circle of banks, and if he feels that it’s not a good fit, he may look to one of his colleagues at the firm. "I had a small-business client who had started a business from scratch.  He sold it and then worked in the corporate world before deciding to start another company.  He called me and said that he had the opportunity to bid on a large project with a professional sports league but needed a $5 million credit line.  I looked at my relationships with the banks and then turned to a partner who knew a bank that lent money in professional sports projects.  Turns out it was a perfect fit, even though it wasn’t my bank."

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