February eNews

Welcome to Washington Trust eNews!

We are pleased to introduce "Business eNews" - an exciting email newsletter from Washington Trust. Washington Trust Business eNews will provide timely and helpful information about business products and services, money-saving tips for your company, bank news and events, special offers and more. We hope you will enjoy Business eNews and welcome your comments and suggestions.

Are You Leaving Cash On The Table?
Making Your Cash Work Harder During Difficult Economic Times

Business owners understand that there is no substitute for a healthy cash flow. Cash is essentially the lifeblood of every business. Knowing what your cash position is and how to make the best use of all your available funds should be a priority. A good cash management () system allows your business to convert remittances quickly into cash and gives you the ability to optimize the use of your cash assets. Effectively managing cash flow can help your business survive economic downturns and position it for future growth.
Read full article. 

Make Sure Your Business Doesn't Retire When You Do.
Failing to plan puts family businesses at risk.

In his inaugural address, President Obama reminded the world: "We remain the most prosperous, powerful nation on Earth. Our workers are no less productive than when this crisis began. Our minds are no less inventive, our goods and services no less needed than they were last week or last month or last year. Our capacity remains undiminished. But our time of standing pat, of protecting narrow interests and putting off unpleasant decisions -- that time has surely passed."

In Rhode Island, it is our family-owned businesses that have made us prosperous. It is the inventive minds of our local business owners that continue to drive Rhode Island's economy. The need for the intergenerational success of these companies is more vital than ever to the vibrant economy, and to the quality of life, that Rhode Islanders treasure.
Read full article.

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Are You Leaving Cash On The Table?
Making Your Cash Work Harder During Difficult Economic Times

Business owners understand that there is no substitute for a healthy cash flow. Cash is essentially the lifeblood of every business. Knowing what your cash position is and how to make the best use of all your available funds should be a priority. A good cash management system allows your business to convert remittances quickly into cash and gives you the ability to optimize the use of your cash assets. Effectively managing cash flow can help your business survive economic downturns and position it for future growth.

Understanding the Cash Conversion Cycle
Effective control of cash flow begins with an understanding of the cash conversion cycle. Typically, this cycle runs from buying inventory or materials, to producing and delivering products and services, to sales, and, finally, to converting sales into cash. You should have a system in place that manages your business's cash flow at each stage of the cycle.

Look at Cash Outflows
An automated accounts payable system can help your business organize its payments by due date. Paying bills when they are due rather than when they are received frees up cash for daily operations and can provide your business with an interest-generating opportunity.

Review Cash Inflows
Your business should make it a priority to convert sales into cash in the shortest time possible. Send invoices immediately after you have delivered goods or completed services for your customers. Your invoices should be clear, provide all relevant information, and prominently display the due date and the amount owed. Ideally, your accounts receivable tracking system should be able to flag overdue accounts. In addition, you should put procedures in place that will allow you to follow up on overdue accounts. If your business has an unacceptably high number of delinquent accounts, you should consider imposing stricter guidelines for granting credit and setting limits on the amount of credit granted.

A Case Study
Poor cash-flow management can create numerous short- and long-term problems for businesses. Take the Carter Company, for example. Over time, the company had become increasingly careless about staying on top of its cash flow and maximizing the return on its short-term assets. The booming economy helped mask many of the company's inefficiencies and allowed it to overlook basic cash management procedures. However, a sales slowdown and delays in settling bills exposed the shortfalls in the company's cash management system. The company had to resort to short-term loans because it lacked the funds to cover all of its day-to-day operations. In addition, the company's credit standing was harmed because its erratic cash flow had caused delays in paying many suppliers. The company's owners now realize the importance of using cash management tools to monitor cash flow and make the best use of all available funds. (The above scenario is fictional and used only for illustrative purposes.)

Solutions from Washington Trust
Washington Trust offers a variety of cash management services and products that help businesses increase control over their cash flow.

Automated Investment Sweep
Through our fully collateralized automated investment sweep, we can invest your business's excess funds in overnight repurchase agreements and deliver a competitive return on your invested assets. You simply agree to a target balance for your checking account, and we sweep any amounts beyond that target balance into interest-earning overnight investments.

Automated Line of Credit Sweep
Your business can link its operating account to provide automated borrowing and repayment as needed. This service provides a convenient way to manage your daily cash position.

Account Analysis
By using this service, your business can:

• Combine business account balances to earn the maximum earnings credit allowance available to offset service charges
• Access a comprehensive overview of account activity
• Maintain appropriate balances for your operating account
• Identify excess funds that can be invested in overnight sweep accounts to generate interest income

Wire Transfers
A wire transfer is an efficient way to transfer funds from a Washington Trust account to another bank (or vice versa) via the Federal Reserve Bank's online wire transfer system. Funds can be delivered to a third party here in the U.S. or abroad. Payments to and from your business are processed quickly and conveniently. Make your request before 2:00 p.m. and the funds will be transferred on the same day.

Merchant Services
Why not increase cash flow by funding your sales within 48 hours through debit or credit card processing? As one of the region's leading credit card processing providers, we offer the latest technology in credit card processing. Not only is our pricing competitive, but we back it with exceptional one-on-one service and training.

The Washington Trust Difference
When you choose to work with the professionals at Washington Trust, your business benefits from our:

• Depth of Experience. Our business banking professionals have extensive experience when it comes to developing and implementing effective services and systems that can improve cash management and maximize the investment return on ultra short-term assets.
• Investment Expertise. Our professionals understand the marketplace for short-term securities. Their focus is disciplined and conservative and emphasizes safety when it comes to your invested assets.
• Commitment to Superior, Responsive Service. Every member of our business banking team is committed to delivering practical, effective solutions to issues that impact your business's bottom line. Locally based and accessible, they'll be there to help you every step of the way - from initial implementation to ongoing administration of whatever cash management services you choose.

It's Smart Business
Is it time to take more control of your business's cash flow? Better cash management can help your business:

• Control and stabilize cash flow
• Maximize returns on excess assets
• Add to the bottom line
• Position it for future growth

For more information about these and other Washington Trust business banking solutions, call our Account Information Center at 800-475-2265 or email us.

Make Sure Your Business Doesn't Retire When You Do.
Failing to plan puts family businesses at risk.

By Peter Maniati, CFP®, Esq.

In his inaugural address, President Obama reminded the world: "We remain the most prosperous, powerful nation on Earth. Our workers are no less productive than when this crisis began. Our minds are no less inventive, our goods and services no less needed than they were last week or last month or last year. Our capacity remains undiminished. But our time of standing pat, of protecting narrow interests and putting off unpleasant decisions -- that time has surely passed."

In Rhode Island, it is our family-owned businesses that have made us prosperous. It is the inventive minds of our local business owners that continue to drive Rhode Island's economy. The need for the intergenerational success of these companies is more vital than ever to the vibrant economy, and to the quality of life, that Rhode Islanders treasure.

The percentage of family-owned businesses that succeed beyond the founder's generation is small and shrinking. Why? Rhode Island business owners are resourceful, savvy, and resilient. Their advisors are sophisticated professionals with expertise in comprehensive wealth management strategies centered on the family's largest asset: its business. Yet companies do fail at the passing of the founder, often for reasons that can be avoided.

Company founders know the likely results of delayed planning: poor decisions are made at a time of great strain; ancient family grudges resurface; the employee who most desires a leadership role may be least suited for that mantle; competitors target customers; fire sale scenarios are proposed; inheritances are eagerly anticipated; litigation is threatened; and unnecessary taxes, including Rhode Island and federal estate taxes, are due.

Some owners see succession planning as an "unpleasant decision". Too many business owners strike the same themes in offering "reasons" for putting off the sound planning urged by their advisors:

• “I'm too busy making decisions.”
• “My father never talked about money or business, so why should I?”
• “I don't want to seem to favor one child over another.”
• “I don't want to acknowledge that an outsider may be a better manager than my child.”
• “I'll work for another 20 years.”
• “Why make a plan when nobody can run my business like me?”

Trust companies are often called on to serve in a fiduciary capacity at the death of business owners. At those times, the fiduciaries witness the benefits of good planning and, too often, the difficulties that result when the owner's best intentions for the continuation of a business were not properly documented.

When serving as trustee (or successor trustee to the founder), a trust company's fiduciary obligations require independence, objectivity, fairness, and strict adherence to the terms of the operative legal document. When the only governing document is the owner's twenty- or thirty-year-old will, poor results inevitably follow. The old will rarely contemplates the circumstances encompassed by many intervening years of business activities and changing family dynamics. It rarely captures the founder's ideas for continuation of the business at the time of death, and/or how the business (or the value of the business) should serve the financial needs of a spouse, children, and grandchildren.

In a best-case scenario, the founder will have documented a plan for continuing the business to serve the interests of heirs. The plan will identify the best individuals (generally, not a corporate trustee) to make management decisions in various aspects of the operation. It may detail resources or training to allow the new decision-makers to succeed, and may highlight strategies to be employed in the future. Alternatively, if preserving the value of the business - the family's major asset ¬- is best achieved from a sale or alternative strategy, this should be documented appropriately, as well. The sooner options are considered, agreed to, and documented in a manner consistent with the overall estate plan, the better. Plans may always be tweaked, as circumstances dictate, while the founder is alive.

The best case has the founder discussing such matters with family members to confirm that the family's desires and expectations are, in fact, what the founder believes them to be. If this is too difficult or emotional for the business owner to undertake on his or her own, the founder may consider resources available to facilitate this important conversation. The best case also incorporates the legal and accounting advice of professionals that contributed to the creation of the family's business wealth.

Succession planning issues are personal, difficult, and easy to put off. But, now is not the time to "stand pat". Addressing planning issues requires of the founder the same resourcefulness, savvy, and resiliency that grew the family business in the first place. With timely action, successful family businesses become successful second-, third-, and fourth-generation family businesses. Rhode Island's economy needs more of these stories.

Peter Miniati, CFP®, Esquire, is Vice President, Wealth Management at Washington Trust

SBA Warns of Fraudulent Attempts to Obtain Bank Account Information from Small Businesses

The U.S. Small Business Administration recently issued a scam alert to small businesses, warning them not to respond to letters falsely claiming to have been sent by the SBA asking for bank account information in order to qualify them for federal tax rebates. The fraudulent letters were sent out with what appears to be an SBA letterhead to small businesses across the country, advising recipients that they may be eligible for a tax rebate under the Economic Stimulus Act, and that SBA is assessing their eligibility for such a rebate. The letter asks the small business to provide the name of its bank and account number.

These letters have not been sent by or authorized by the SBA, and all businesses are strongly advised not to respond to them.

The SBA is working with the SBA Office of Inspector General to investigate this matter. The Office of Inspector General asks that anyone who receives such a letter report it to the OIG Fraud Line at 1 (800) 767-0385, or e-mail at OIGHotline@sba.gov.

Refer a business customer and receive a $100
American Express® Gift Card.

Washington Trust appreciates the opportunity to serve as one of your company's trusted advisors when it comes to financial matters. And we'd like to be first on the list for your friends and associates, as well. So when you refer someone to us, we'll reward you - get a $100 American Express® Gift Card* when your referral opens any new business account.** Simply complete this form and we'll do the rest.

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