The Key to Bankers’ Hearts

Dazzling them with your finance knowledge can help keep the capital flowing, recession notwithstanding, according to private-company CFO Ron Box.

“Banks aren’t lending,” we keep hearing, but like most generalizations, it’s not literally true. Even a business that has been flat-out hammered by the recession can get a credit line — if it manages its bank relationships with the proper care.

For Joe Money Machinery, a regional dealer of heavy construction equipment in the Southeast, that means working with more banks than is typical for a company its size, to lessen the chances of the capital spigot shutting off. For CFO Ron Box, it also means serving as an ad-hoc business consultant to his lenders.

Though the company is privately held, Box has been on a mission to learn the intricacies of International Financial Reporting Standards. He has taken 30 hours of training from the American Institute of Certified Public Accountants, partly because he figures his banks are interested in how a switch to IFRS would affect other clients. Offering to share knowledge is one way he keeps himself in their good graces.

That’s just the latest skill-set expansion for Box, a Certified Public Accountant and a former banker himself. He has been Joe Money’s CFO for 12 years and, a few years ago, took on the additional title of chief information officer. He embraced the CIO role, earning certifications in information technology, systems security, and financial forensics.

Box took a break from dealing with the financial crisis to talk with CFO.com about these various challenges and opportunities. An edited version of the interview follows.

How big is the company?

Our revenue was $28 million a couple years ago, but we’re in the construction business, so that obviously has declined.

RonBoxFinal

So it’s a small private company. What’s your interest in IFRS?

Well, the IASB is coming out with a simplified version for private companies. [Editor's note: The board says to expect a rollout in the second half of this year.] With IFRS, you mark-to-market more assets. We’re a 72-year-old company that has real estate on our books at historical cost, so there could be a big benefit in IFRS based on the substantially higher fair market value for that property. Any private-company CFO should be knowledgeable about it, to determine whether to consider adoption.

But even more importantly, it has been my objective that our key bankers consider me knowledgeable in the issues important to their commercial portfolio. XBRL is another one.

Why is that so important?

Much of dealing with financial institutions is surprisingly personal. Bankers who view me as capable of dealing with issues like that will have more trust in me and less perceived risk in negotiating the loans. They have expressed this to me in the past, so I am confident it is worth the extra effort.

With IFRS I was able to say, ultimately on adoption we expect there would be a positive effect on our equity. It gave them a clearer picture of where we would be. But beyond that, as I’ve talked with bankers about various financial issues, they’ll say, “Oh, tell me more about that — I have a customer it would apply to.” The more I can tell them, the more they’re going to view my skills in a positive light.

Discuss

Your email address will not be published. Required fields are marked *