Strategic advice | May 2024 Balance short-term and long-term goals to drive consistent results

In traditional banking, clients usually start with requests for specific products they think they need. But there’s often more than one potential solution, each with different short- and long-term impacts.

“We help clients start with the problem instead of the solution,” says Saez. “Sometimes clients really do know what they need. But other times, they could benefit from having us help them take a step back and see how different options could play out over time.”

If purchasing power is your need:

• A commercial card can help you make faster payments, manage cash flow, and eliminate costs while reducing administrative overhead. Since commercial cards are typically paid in full each month, you may want to be conscious of your spending and ensure it fits into your budget.
• A line of credit can also help businesses bridge short-term gaps in cash flow, including during seasonal peaks. While this type of financing may be better than a commercial card for larger or longer-term needs, a loan or lease may make more sense for even bigger purchases, like buildings and vehicles.

Tell your Truist relationship manager about your goals, so they can offer guidance on the short-term and long-term impacts.

> Learn how to build a capital plan to help secure funding for your business needs.

Keeping pace with technology, machinery, and transportation can give you an edge now and down the road. And you don’t have to deplete your working capital to move forward in these areas. To make investments that benefit your business both now and in the future, tap the knowledge of specialists. Here are some examples:

Equip your business for growth. Working with someone from Truist Equipment Finance can help you make forward-thinking decisions. Options for equipment purchases include fixed- and floating-rate loans and several types of leases.

You may find it easier to plan for payments with a fixed-rate loan since the interest rate remains constant for a set period. However, a floating-rate loan might cost you less if you can pay it off before the term is up—or if you expect interest rates to fall.

> Find out how Truist Equipment Finance offers knowledge and coverage across all assets and industries.

Make a bold acquisition. As companies grow and their financing needs become larger, exploring a syndication of loans may make sense. This strategy helped national cable network INSP free up capital for its first M&A transaction in 2022. INSP owner David Cerullo, a self-described “student of long-range planning,” says he appreciated that Truist Securities helped him find immediate solutions that allowed his company to seal the deal while preserving INSP’s long-term financial health. Those solutions included providing the capital needed at closing and serving as the left lead arranger, overseeing dividing the debt financing among Truist Securities and other banks.

Reimagine your physical presence. A commercial real estate loan can help you realize the goal of owning your headquarters, increasing your workspace, or expanding into new regions. And you might be able to make this type of real estate move sooner than you’d imagine. That was the case for Truist client Willow Designs, the subject of a client success story in our Truist Purple Paper^SM: The power of partnership.

When capital is plentiful, some companies and organizations may deprioritize cash flow forecasting. That was the case with many not-for-profit health systems during the pandemic. As COVID-19 began to ease up, Truist hospitals and health systems industry consultants like Greg Oliver urged clients to return to their previous schedule of proactive planning.

“Tactical cash flow management becomes increasingly important in a higher interest rate environment,” Oliver says. That’s because every day you’re paying that high interest rate, you’re not earning interest income—or investing it back in your business.

Your Truist relationship manager can help you explore ways to improve liquidity today and create a better balance sheet in the future. Some examples:

• Accelerate your billing cycle. If you’re invoicing once a month, consider doing so every day—or even weekly or biweekly.
• Use electronic payment systems to improve efficiency and speed around collections.
• Negotiate your accounts payable. See if any suppliers or vendors—especially those that highly value you as a client—will extend your time to pay. Or negotiate for a better deal when you pay early or upon receipt.

> Learn more about advanced payment solutions that can help you balance your long-term and short-term goals.

Don’t wait to start thinking about the long game.

“I recently met with a client whose company has grown like wildfire, and he hasn’t slowed down to think about what he wants his business to look like five years from now,” says Saez. “I told him that I really want to pick his brain about his hopes and dreams because that can help my team see how they align with his strategic objectives.”

The sooner you start having these deep-diving, forward-thinking conversations with your Truist relationship manager, the better. Because being proactive about both short-term and long-term goals puts you in a better position to make decisions.

“When businesses don’t start thinking long-term early enough, they likely won’t be as poised to deal with a future surprise, whether it’s a great opportunity or a complex challenge,” says Saez. “We understand owners and leaders need to focus on keeping the lights on, and that’s why it’s rewarding for us to stay alongside them every step of the way—because we can help to shine a light on what’s ahead, too.”

A strategic investment plan allows you to make the most of excess funds to act on future goals faster. It also helps you navigate cash flow fluctuations more nimbly. Here are some areas to consider—and discuss with your Truist relationship manager.

• Set clear investment objectives for both the short and long term.
• Revisit your risk tolerance and budget so investment managers can help you stay within limits and alert you when the winds shift.
• Decide what metrics you’ll monitor—and define what should happen when you reach your threshold.
• Consider creating separate investment policies for each area of your business. For example, some not-for-profit health systems prefer one investment policy for their hospital system and another for their foundation.
• Set a date for reassessing investment parameters. This should happen annually, at minimum. Ask your relationship manager what major changes should prompt you to reach out sooner.