Understanding the business member’s cash-flow lifecycle

For credit unions that operate a member business lending program, getting to know the details of a member’s needs is key to establishing a long-term and successful relationship.

As member service continues to evolve, this typically involves developing and implementing vibrant member engagement programs. Far beyond the typical sales and service culture, member engagement both encourages and requires credit union staff to drill deeply into the minutia of the personal and business needs of members.

This is especially true when it comes to seasonal business lending requirements. Credit unions that know their members well will also recognize that not every business is run and operated the same way. Seasonal businesses require understanding of a different nature when it comes to cash flow requirements.

Examples of seasonal businesses include any business related to a holiday (Halloween, Christmas, etc.), businesses tied to specific weather (summer camps, ski lodges, etc.), and other cyclical events (such as tax preparers in the first quarter, gym owners in January and lawn care specialists in the spring and summer).

How can your credit union help seasonal business lending members? Following are a few ideas.

• Offer short-term loans and lines of credit. These can be invaluable lifelines to seasonal business lending members. This extra cash flow can also help with potential “tight spots” on a member’s calendar. Other options include business credit cards and revolving lines of credit. Another positive to this is that credit unions can help keep their seasonal business members out of the clutches of high-rate lenders.
• Assist in seasonal member business planning. Discuss their unique and individual needs with every business member. By taking a look at the calendar and anticipated cash flow challenges ahead of time, your credit union cannot only help the seasonal business number keeps his or her head above water, it can also deepen and develop the relationship.
• Offer flexible terms. Seasonal businesses are particularly afflicted by the highs and lows of cash flows. To the extent possible, be understanding of this and work with your seasonal business lending members to accommodate flexible payment terms, rates and dates.

Credit unions that work hard now to understand, anticipate and appreciate the business needs of their members, particularly seasonal business lending members, stand a better chance of developing successful long-term relationships. By taking a few steps to help ensure such healthy relationships, credit unions also position themselves as the lending and business services provider of choice for countless potential business lending members.