As we continue to navigate challenging economic shifts, it’s essential for business owners and leaders to have a strategy to weather times of uncertainty. We spoke with Paul Williamson, president of the Colorado region at UMB Bank, for his insights on the Denver market, business leaders’ sentiment and how UMB is working with companies to financially prepare for what’s ahead.

How is the Denver business landscape evolving?

While population growth in Denver has slowed in the last year or so, it’s still one of the top 10 cities for economic growth according to Kenan Institute of Private Enterprise’s 2022’s Fastest-Growing Cities in the U.S. report. The retention and return of millennials combined with expansion in growing industries such as software, financial services and aerospace continue to fuel growth and provide job opportunities that make Denver a great place to work and live.

We’ve seen continued interest in lending across the board from our Denver clients, which is evident in our most recent numbers. In the second quarter of 2023, we reached a significant milestone of $3.9 billion in average quarterly loan balances—a 17% increase from the second quarter of 2022, demonstrating continued year-over-year growth.

While Denver may be positioned for economic growth, there are still concerns regarding a recession. How are business clients reacting to the current environment?

Preparing for any condition that impacts your business requires sound financial planning, including economic uncertainty. We’re seeing clients prepare for several scenarios as we look ahead to 2024.

The Colorado region might be on cautious footing as concerns about a recession continue to play out, but many local businesses are in a healthy position today, and I expect it will continue despite the current environment. Some of our clients remain in acquisition mode, while others are finding new ways to utilize payment solutions and treasury management to increase efficiency and optimize operations. Additionally, numerous sectors are still in growth mode, with owners’ general sentiment being that “business is good, but we’re still exercising caution.”

On the flip side, some local impacts may be felt in the short term, so we’re proactively working with clients to ensure they put themselves in a solid financial position.

What are some of the main areas you’re advising clients on?

Broadly, this includes items like establishing appropriate cash reserves, being more thoughtful on big investments, creating and reviewing contingency plans, reviewing staffing levels to ensure they’re appropriate for the business demand, and being mindful of inventory logistics and operational needs. More specifically, a couple areas that have been consistently discussed with clients include liquidity management and payment options.

  • Liquidity management and optimization: Due to the impacts of current economic conditions and rising costs of borrowing, many businesses are taking a closer look at cash and liquidity and how to utilize it strategically. We’ve been advising clients to be proactive with their finances and assess current cash and income sources to determine how cash and liquidity can best be protected in anticipation of a more challenging year. We’re also working with clients to continue proactively reducing unnecessary expenses to free up extra funds should they need a higher reserve. And, when relevant, we’re also encouraging them to consider new ways to optimize sales and cash generation, which is finally providing some meaningful yield compared to recent years. Finally, we help companies optimize their liquidity through structured short-term instruments.
  • Business credit cards: While it’s not new, we’re having significant discussions with clients around business credit cards. The spending power and quick access to funds, rebates and rewards are very attractive for companies – especially in volatile economic times. Perhaps most importantly, business credit cards also allow companies to tap into benefits like increased administrative features and fraud protection—two critical areas from an efficiency and risk management perspective.

Find the right financial solution for your business

Given the current economic environment, how does UMB plan to approach the remainder of 2023?

We continue to see opportunity in 2023. As a bank built on relationships that’s been in business for more than a century, we’ve successfully weathered economic uncertainty before, and we plan to do the same this time around. We’re still seeing demand across all business verticals and sectors, and we’re committed to meeting clients’ needs–no matter how challenging or complex—to help them remain successful.

We’ve also expanded our focus on small business with a team of specialists dedicated to this audience. This team is well-versed in the needs of small businesses and offers advice, solutions and support at every stage. Our small business banking team resides in Colorado and has recently expanded its services to our broader, eight-state footprint.

Final thoughts?

The months ahead will be important for Denver metro and Colorado businesses as we navigate continued fluctuating conditions. During times of economic uncertainty, having a strong financial professional that has the desire, capacity and ability to be your full-service banker to support your company is critical. As your business needs ebb and flow, having someone who knows you and your business is invaluable – especially one who is able to responsibly advise based on your specific situation in the current market. This includes a banker who listens to your needs and concerns while providing creative solutions on how those can be most effectively addressed.

This article is educational only. Please consult your financial and tax professionals. If you are interested in learning more about how UMB can help your business, visit our website.

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