Small Business Edge Webcast: How the Pitney Bowes Bank Helps SMBs
- Hello, everyone. Welcome to the Small Business Edge webcast series. I'm Brian Moran, CEO of Small Business Edge. And today I wanna welcome Ed Haidenthaller president and CEO of Pitney Bowes Bank to our show.
We're gonna talk to Ed about what's been happening in 2020 with the banks small and mid-sized business customers? How they've helped them navigate COVID and what they have in store for 2021? So with that, I wanna welcome to the show Ed Haidenthaller. Hello Ed. - Hello Brian. Thank you. I appreciate the opportunity to be on your show.
It's an honor. - Ed it's my pleasure. I love talking to leaders like you who really have a great view of what's been happening in the marketplace and all of the access to information that you have and you see what's going on within the market.
I always feel like I learn at least four or five things when I talk to people like you. So I'm excited. Tell me a little bit about Pitney Bowes Bank. 'Cause I know there's Wheeler financial, there's Pitney Bowes Bank and then there's Pitney Bowes financial services, right? You have a lot that you offer SMB customer. - Sure, so at a high level, essentially you've got a global financial services or Pitney Bowes financial services and the bank is a wholly owned subsidiary of that. And the bank then owns a subsidiary called Wheeler Financial.
- Okay. - Between the three, I guess the easiest way to describe it is across different platforms and in the bank environment or whatever, we're able to offer leasing services, lending services to all Pitney Bowes customers, with regard to helping them with their postage needs, their equipment needs and other working capital type of needs. - That's pretty impressive that I'm sure that it almost feels like one-stop shopping for your customers. So I'm sure they appreciate that.
What are some of the biggest needs that you've seen of your small to mid-sized business customers in 2020? - So Brian, as you're aware 2020 has been a really unique year. The economy, the country with COVID and all of the above, it's been an environment that no one has ever seen before. So as we started to get into it in early, early March we recognized that our customers were hurting and it was gonna get worse before it got better.
So we saw a lot of banks at that point starting to do things like fee waivers and other types of things. And we recognize that that's almost like putting a small bandaid on a large wound. Really customers needed more than just their late fees waived. They needed some sort of a deferral of payments or whatever so they could have time to figure out how to address the issues how to keep their customers working or their employees working and continue to adapt to this new environment. On top of that they also had to change their sales practices. They had to move to a remote type of environments in which their employees could work and operate.
And then you had all the restrictions of who can and cannot come into your business, whether you can open, whether you have to drive through, all of those kinds of things. So as we looked at it, you know those are almost the same kind of things that Pitney Bowes overall as a corporation was experiencing. And we had to adapt to. So as we looked at our customers and the needs they had, the goal was to try and address the longer term needs and develop programs and products and capabilities to help, to truly extend a help rather than just put a quick band-aid fix on. - Yeah it's, amazing Ed when you look back isn't it? That we actually survived the last eight, nine months or however long it's been. And you're right.
I remember back in March when they were talking about a two-week shutdown and everybody was in a panic, "Oh my God, what are we gonna do?" You know, two whole weeks we're gonna be locked down. Ed so I give you a lot of credit for having the foresight really to look at this from a longer term perspective. And know that waiving fees wasn't gonna cover it. So kudos to you for that. - Thank you like I said we try to do at Pitney Bowes, we have a slogan that we do the right thing the right way. And we tried to truly understand our business from our customer's perspective and be able to adapt.
- Yeah, well and so let's talk about how you adapted, because as you mentioned Pitney Bowes Bank provides equipment financing, commercial lending, global payment solutions. How would each of these areas change for you and for your customers during COVID? - You know that's a really good question. And maybe if I could, I'll take each one of those areas one by one. So let's start with the equipment financing arena. If you think about equipment financing, the type of financing that we've been doing and focusing on is on business essential type of equipment and across various different industries and different industries have been impacted differently obviously.
So most of the financing that we've done to date has been around outdoor types of services. So we've done a fair bit of construction. We've done a fair bit of servers and things like that. We've also done a fair bit of work in the healthcare arena. As we think about those types of businesses, the construction are mostly outdoors. And actually that particular area has boomed to some degree because the construction progress continued with the lack of foot traffic and things like that.
It's somewhat been easier for large construction projects to move forward. So we haven't really seen a decrease in that area. The challenge has been meeting with the business owners and getting the contract set up and so on and so forth.
And we've worked through some of that and capabilities with regard to that. The other challenge has been the manufacturers of the actual equipment. So a lot of times we'll finance brand new equipment. And if there's a delay in manufacturing of that particular piece of equipment then it delays the actual funding process so. - Yeah, you know, it's interesting, then you realize that the whole supply chain system, that it's a lot of moving parts right? And I'm sure the construction industry felt that we definitely saw there were industries that, had booms. Like that had tremendous growth and then other areas that struggled.
So, all right. So that was equipment financing. And what about commercial lending and global payment? - So let's move on to commercial lending. So one of the things we've seen is as the economy has had these challenges and these we'll just call it a slowdown or recession or whatever you wanna call it.
We've seen a lot the larger banks withdrawing out of this market. IE they've somewhat delevered. So they're selling off some of their assets. They're restricting growth in commercial lending areas.
And part of that is their attempt to truly understand what the economy is gonna look like going forward. What our business is gonna look like, and to manage that risk. And we've looked at some of the same risks and same changes but the end result for our customers has been that a lot of their working capital lines or solutions or opportunities have been withdrawn. And so there's this void. And so what we've tried to do is identify that gap and also move into that gap to try, because we understand the small business to try and address those needs of our customers. 'Cause we understand their business.
We work with them day in and day out, Pitney Bowes has been around for a hundred years and you don't get to a hundred years without understanding your customer base. And our customer base is the small to medium customer. - Right and these are the critical, you know times when you talk about that I remember in the last great recession from 2008 how you knew it was going to be bad when all of a sudden everybody started pulling in their lines of credit and their loans. And I remember thinking to myself, okay this is not gonna be good. And that's when, you know small business owners need to recognize, okay we need to get our receivables in order. And I'm thinking of our viewers right now, who are saying to themselves how do we put ourselves in the best financial position? And that's just one of my takeaways is make sure your net 30 doesn't become net 60, net 90 net, Oh my gosh, what am I gonna get paid? - So Brian on the other side of the balance sheet if you think about it as a small business owner you've got to try and keep your production going.
You've got in an environment where maybe your employees can't even come to work. So how do you do that? And how do you continue to pay people when everything's slowing down? Now, obviously the government tried to step in with programs various different programs and so on and so forth, and those have been helpful but again, they're more band-aids than they are a long-term fixes. So if you think about payment solutions a lot of people were restricted from going into their offices, paying bills, so on and so forth. And as you think about our postage there's been a slowdown in that particular area but there's already been a slowdown. So if you think about it more and more people are figuring out ways to pay their bills electronically. They're figuring out ways to communicate electronically through various different social media platforms, as well as more and more people are using email and electronic signatures, all of that kind of stuff.
And so the mail industry overall has been experiencing secular decline for some time. Obviously the COVID situation exacerbated that to some degree, but we've also seen some normalizing as businesses have figured out how to continue to interact and to work in this new world, if you will, or at least in this temporarily new world environment. So we've seen some leveling out on that, on the shipping side of the house. So if what we have seen is a dramatic increase in shipping activity.
So more and more packages, envelopes, letters and things are being overnighted shipped from various different locations. People working remotely has required that. And so that's, we've seen some impact in those areas, but offsets by increases in shipping areas. - Right and I definitely, you know given the time of year that we're talking about right now I know that we're seeing it's, you know huge uptakes in shipping, right.
Mailing and shipping at the end. And shippers have even said if you haven't locked in your spot right now, chances are you're probably gonna be waiting in line. Because of how much shipping and a lot of that probably has to do with just, it's almost like the accordion effect. all of the importing and exporting slowed down during COVID. And then when things started to open up, they had to make up for lost time. And then they said, "Oh, well we don't know what the future holds, let's make sure we get our orders in now."
- Yeah, I mean, you've seen this contraction and its expansion and I think the other thing that the learning that we get out of this whole situation is I think the way companies do business is fundamentally changing. What you used to do a year ago or even two years, or three years ago just isn't gonna work anymore especially with the new environment. And there was some resistance to remote working and things like that. I think COVID has forced people to adapt and they've recognized, you know maybe I can continue this way and cut costs in other areas like facilities and things like that so - Yeah and that's a great segue into my next question.
So we talked about equipment financing, commercial lending, global payments. What is Pitney Bowes Bank forecasting in 2021 for these three areas? - So if you think about equipment financing we believe that, that area is gonna remain strong. And we're working on new partnerships with equipment manufacturers and others sellers to be able to address what we see is gonna be continued strong economic growth there.
- That's good news. - For payment solutions, we'll continue to see basic mail circular decline. But again, as I indicated we're also seeing a pickup in shipping related spend.
And we're addressing that with new ways to help receivables and payables and other shipping related type of activities and financing around those areas. So we're working on some new products and some new offerings in that particular area. So we see the shipping area growing dramatically but mail continuing to decline on it's circular rate. Will it ever go away all the way? I don't believe it will only because there's always gonna be some need for someone to put something in your post office box.
- Hey, I just did that today. So I use my SendPro machine and I sent out a book to a client and I sent out an old newspaper that I found to one of my college roommates. And I sent out a handwritten note to somebody. So I am old school. I still read three or four newspapers a day. And I love my sendPro machine.
So please don't take that away. - No, there's no intent trust me. Let's talk about the last area of commercial lending. So this is where I see some really exciting things happening within the bank and the other global financial services offering. So we've got a lot of things in the work.
Some of those are half-baked at this point. So it may be somewhat premature to try and describe those as we're in the process of putting those together and rolling those out but just know that the bank is focusing on four or five different working capital type products maybe some receivables financing products, all of those things will help facilitate the small business owner to be able to manage his cashflow. 'Cause it's all about cashflow in these dire times. And that's where we see the largest areas of growth for the bank, which will actually accelerate the bank's growth in not just through the rest of 2020, but 2021, 22 and 23 and beyond we see significant growth in that area of the bank.
- So if I'm a viewer watching this right now and I own a business construction, healthcare, retail, whatever this is a conversation I should be having with Pitney Bowes Bank now right. I wanna look at 2021. I wanna start forecasting my business and I'll see the ebbs and flows to that and I'll come in and I'll talk to you now Ed about, okay, here's my plan for 2021. I may need help in these months or just, overall having some kind of access to capital so that I can deal with the ebbs and flows of my business. - Yeah I think having been a CFO of a small business and an entrepreneur and started my own business and whatnot, I kinda understand that side of the house, of the challenges that these small business owners face and especially in times of economic contraction.
The biggest challenges they have is keeping A the doors open the lights on, but also growing the business. And so if I were a business owner I'd start to think of a couple of things. One is, as you indicated you're doing your planning, your projections and so on and so forth. But at the end of the day, it also comes down to how am I gonna pay for all of this stuff, right? And so a lot of business owners, haven't up to this point maybe thought of Pitney Bowes as a financing capability.
Many customers don't even know or many people don't even know that Pitney Bowes has a bank. And if you think about it, we're trying to put ourselves in the business owner's seat and say what do you need to operate your business? Well, if you need capital investment or equipment to grow your business we can help you with that with our equipment financing if you need short term working capital or just to be able to keep the lights on and pay the bills and those kinds of things we're gonna be offering some working capital solutions. If you need help with inventory financing or other things like that, we're looking at those areas too. And so our goal is to try and help be not necessarily replace your current bank because we don't offer checking accounts.
We don't offer processing and things like that but be an alternative to you have one more arrow in your quiver. So to speak as to who you can go to help you move the business forward as a small business owner that's your toughest thing is capital. - So this, I really feel like this conversation is so timely because so much has changed.
And this is definitely when at especially this time of year, when business owners are starting to think about 2021, for some of them the last two months of the year are the biggest, will make or break their years. So they are, you know, head down trying to execute any kind of plan that they have for the holidays. But right after that, it's gonna be okay. You know, now we got to look at 2021, where do we stand? And how do we give ourselves the best chance for success? And I always say to my clients, my listeners, my readers, viewers, I say, you know you have to have your financial house in order.
And that is, you know, I can't remember. I think it was Harvey McKay who said, "Fill your well before you're thirsty." And it's the same thing is true with your access to capital.
The worst time to be looking at your financial situation is when your cashflow is in the red and you're one of your largest customers, is suddenly gone net 90 on you. And you're like, okay well my payables are still here. You know, their net today. And my receivables are net 90.
So yeah, so let me reiterate that to everybody listening, have the conversation the financial conversations that you need to have now instead of when you're behind the eight ball. And I want to pivot just a little bit right now and we're coming into the home stretch of this very informative webcast, but you know one of the things you mentioned was the remote workers and how everything changed when people weren't going into the office and going, to their desks and whatnot. How have your employees been able to stay connected to your SMB customers during 2020? - Sure I'm gonna address that in two facets. So as a federally chartered bank with federal deposit insurance corporation and whatnot, we're required to have what we call disaster recovery planning and disaster recovery plans in place. One of those aspects of that planning and processing is a pandemic type of environment.
And we've planned for this for, the bank's been around for 23 coming up on 23 ish years. And so we've planned from that from day one now planning and actually being able to execute are two different things. So in anticipation of our strategy over the last three years, we've actually tested our pandemic remote working environment by having every employee within the bank rotate at least one day a week, working from home. So when the pandemic hit literally what happened was I was in Connecticut at the corporate office on business on Friday, on Saturday we activated our disaster recovery plan. And by Monday morning, 100% of the bank was remote.
- That's incredible. That's a story you could tell to your customers, right? - Yeah. - Because I promise you this not every small business is created equal and some of them are still trying to figure out their disaster recovery plans nine months into it. Well, so kudos to you for having that. - Well, so that's one aspect as a bank that's what we were able to do.
So all of our employees have been working remotely. I'm currently in the office because I come in once a week to process things like mail and things like that, those channels still have to stay open. So you adapt and you work with it, but more importantly let's talk about our customers, right? And how do we keep in touch with our customers? How do we interact? Many of the structures and things that we'd been putting in place over the years enabled us to reach out to our customers, and we use all forms of multimedia. We use telephones, we use, you know, those kinds of things are all in place and have been tested and tried. And so ha what are there some challenges early on? You bet there were, you know keeping in contact with customers, but our call centers and everything are operating 24 seven. And so we're able to mann and staff those and be available for our customers.
The biggest challenge was letting our customers know that we're here for you. And we're happy to continue to work with you. And we've got some programs in place that if you're hurting, we can work you in those ways. Let's have a conversation. And you know, it doesn't need to be the end of the day. We can work through this.
- And that can, we should reiterate that because that is a lot of times when you know things go sideways in a business, they dropped the lines of communication. And let me repeat what I just said. And that is, you know if you were a Pitney Bowes Bank customer by all means, you know, make sure you're staying in touch with them and see how they can help you. Right? I mean, that's a no brainer. You should be doing that with any financial services company that you're working with.
They have a vested interest in your success. They want to see you succeed. They will help you, but you have to ask you have to tell them what your situation is so that they can come up with the right solution. I love this. So I wanna wind this up with, how can customers and prospective customers get in touch with Pitney Bowes Bank? What are the best ways to do that? - Sure, so you should be receiving your regular statements on a monthly basis, and there's phone numbers that you can call there.
We've also moved to more of a proactive stance into monitoring your accounts. And if we're seeing some struggling with making payments on time and so on and so forth, we're now reaching out to customers proactively and saying, you know we noticed you've had some changes in your behavior. Is there anything we can do to help? So between those two avenues and our call centers, we can get it done. Or at the end of the day, if you're not able to get a relief that way, just call our 800 number for the bank and it'll go directly into the bank. - Now I'm thinking of, you know, I'm at another bank and my bank doesn't love me the way the Pitney Bowes bank loves its customers.
So how do I become a Pitney Bowes bank customer? - Well, all it takes is you indicated you already have a SendPro machine-- - I do. - You are a Pitney Bowes customer whether you recognize it or not. - I love it. I love it. - So I think that's maybe the other thing to reiterate is if you're working with Pitney Bowes in one way shape or another, chances are that you're already in contact with the bank and if you're struggling financially, give us a jingle and we'll continue to try and reach out to you. But, we've got several hundred thousand customers. We can't reach them all at once.
So feel free to give us a jingle. - I think that's a great, and not only if you're struggling but if you have opportunities as well. - For sure. - I mean any questions they should reach out to you and I'm a firm believer in that, is that make the call and start that conversation. This has been fantastic.
I really, I thank you, everybody who's watching. Thanks you for kind of just shining a light on what the a good relationship looks like between a business owner and their banker, you know that they are on the same side of the table that they are working together, that you should reach out to them, especially when you know, things go sideways. They may help you, you know, right the shape.
And in many times, you know maybe it's a month, it's two months it's three months, okay, let's fix this, but we know that you're a solid business and that you hit a speed bump. We'll fix that. We'll get you back on track. - Yeah, and, you know, just in closing, I appreciate this opportunity. I feel for all of our customers, not just all of our customers that I feel for all the small businesses of the world, it seems sometimes when policy decisions and so on and so forth get made, they don't necessarily address the people that I still feel are the fuel of the country and you know, keep a good relationship with your financial partners. And I would say there, doesn't just have to be one you know, we're not the only game in town.
And I recognize that you have need to have other banking relationships and things like that but don't count us out as being able to help, because I think we're uniquely positioned to be able to understand your business. And we're able to offer solutions that maybe others are pulling back on. - More options, right? More options. I think we're gonna leave it on that note. I think that's a great message to send to business owners right now, as we start to wind down 2020 and as we wanna hit the ground running in 2021. So Ed, thank you very much for your time today.
Thanks for all of the insights. Thanks for shedding light on all of the things that Pitney Bowes Global Financial Services does Pitney Bowes Bank, and we appreciate it. And for everybody who's watching today this has been the small business edge webcast series. I'm Brian Moran, and there'll be a list of resources that we'll include so that you can find out more about the things that we talked about today. With that, I wish you the best of luck stay on the road to success.
And we look forward to connecting with you again very soon, have a great day.