Owning a business can have many ups and downs, but one thing is certain: treasury management is key to business success.
Cash management falls under the treasury management umbrella, which refers to a business’s cash flow. Treasury management encompasses everything from cash management to business funding and investments. A streamlined treasury management system allows you to spend your time doing what you do best – running your business.
Over 82% of business failures are due to poor cash management, according to one study. Alarming, right?
“Treasury management services give clients the tools to bank efficiently so they’re not spending time in their office,” said Alix Kaufmann, VP, Treasury Management Officer at First Federal Lakewood. “Business owners should be running their business and unfortunately, many of them are spending too much time in front of their computers.”
Streamlining cash flow within a business doesn’t just stop at accounts receivable, either. It extends to loans, business sales and how much cash is leaving the business – also called outflow.
“No business is too small to make money,” Kaufmann said. “Treasury management services are there so business owners can handle more clients and a bigger workload.”
When it comes to treasury management products, Kaufmann recommends looking into a few for your business:
1. ACH Origination
Automated Clearing House origination (ACH origination) may be particularly helpful for those business owners who want to make a payment quickly. An ACH begins when a business owner allows their bank or other authorized originators to debit directly from their checking or savings account to make a payment.
“It’s something that everyone can use and ultimately is a means to replace checks for payables and receivables,” Kaufmann said. “Everyone pays themselves and it could replace bill pay, too, since no mail is going out and everything is electronic.”
Not only that, but the ACH system is encrypted and provides business owners with a level of reassurance because payments are coming in at a certain time period. Plus, they won’t have to worry about checks clearing.
2. Remote Deposit
Depositing checks remotely is a crowd favorite and allows business owners to scan checks at the office instead of taking them to a branch. Efficiency is worth its weight in gold for business owners, especially when it comes to depositing multiple checks at a time – sometimes even cutting time in half.
“The two biggest advantages of remote deposit are the convenience and reporting aspect,” Kaufmann said. “This product logs check images and creates virtual deposit tickets so the bookkeeper can go back and pull logs easily. It’s a huge time saver to those who are depositing 20 plus checks at a time since they’re not having to make copies.”
However, remote deposits aren’t connected to your smartphone like other applications may be. When it comes to remote deposits, you simply connect a machine to your business computer and can start scanning checks quickly.
3. Cash Sweep
If a business owner has multiple bank accounts in different institutions, cash sweeps will automatically transfer funds from one account into another if it drops below a minimum balance.
“A lot of business owners could benefit from cash sweeps,” Kaufmann said. “It allows them to put a threshold in their savings or checking account and if the account goes past the threshold balance, it then sweeps to other accounts to stay at that threshold. It’s a great way to keep money safe and it makes bookkeeping a breeze.”
4. Positive Pay
Unfortunately, fraud is a common issue that many businesses, big or small, have to deal with. Positive Pay helps counter that, thanks to its anti-fraud service.
“Positive Pay is a popular product among business owners,” she said. “Many people have chosen this service and nothing else because they experienced check fraud and needed a new solution. Many business owners simply cannot afford to open a new account every time they experience fraud. It’s more than a second level of protection, it’s also a bookkeeper that saves business owners time and money.”
When thinking about treasury management products for your business, be aware that there is no one-size-fits-all. Review your current products and make a decision if you need to add, remove or simply stay with what you have. Talk to your business banker for recommendations if you feel stuck – they are there to help guide you through the sometimes overwhelming process.