By Ronnie Evans
Major oil companies and analysts are predicting a prolonged slump for the oil industry, which casts a dark cloud over the workboat industry.
But all is not lost. Now is actually a good time for workboat operators to take stock of many of the tasks that fall to the wayside when business is booming. This includes having a candid conversation with your banking and financial partners about your company’s short- and long-term finance needs. This may open the door to discussions about how your bank can possibly provide relief during difficult times. Consider the following when thinking about how to engage with your banking partners:
1) Invest in the relationship.
Some of the most successful workboat businesses take the time to nurture relationships with their top banking partners year round, in good times and bad. By scheduling quarterly meetings with key banking partners, workboat operators can stay ahead of the curve by discussing market trends, the company’s financials and upcoming needs well in advance. This type of transparency helps solidify relationships and helps bankers and credit partners feel more confident in your business, both now and in the future.
2) Gather your numbers.
Before sitting down with your banker or finance provider, prepare financial outlooks for the next six, 12, and 24 months. These numbers should be based on recent performance, current performance and the future market outlook. It will help provide a roadmap for an open and honest discussion with financial partners.
3) Build in extra time.
If you have balloon loans coming due, leases nearing the end of term or other changes coming down the pipe, build in plenty of time for both your business and your banker to put a plan in place. Because banks and finance companies must navigate an expanding and more complicated regulatory system, it may take longer than it used to for banks to provide financial solutions and approvals.
4) Consider equipment finance.
In many cases, businesses don’t have the luxury of just investing in equipment during good times. Workboat operators need capital equipment – from barges and tugs to telephone systems – during good times and bad. Equipment financing is a viable option for companies that need new or upgraded equipment to remain competitive, even when money is tight. Flexible financing options include no cash down, deferred payments, favorable tax treatment, payments that mirror cyclical fluctuations in revenue, and other options that allow workboat operators to obtain equipment while maintaining ultimate flexibility.
Now, more than ever, it’s important to educate yourself about the options your company has when it comes to loans, leases and other forms of credit. Finance partners may be able to restructure existing loans, extend credit terms, or provide other options that can help sustain your workboat-related business through the slump. By having these conversations now, you’re setting your business up for smoother sailing.
Ronnie Evans is Director of Marine Finance at Key Equipment Finance, the equipment finance affiliate of KeyBank. He has more than 20 years of experience in the finance industry. Email him.
The views and opinions expressed in this blog are the author’s and not necessarily those of WorkBoat.