Why Small Businesses Should Use Bank Treasury Management Services
For
many years larger businesses had a set of tools at their disposal to
help them manage cash electronically. Because of technology changes with
the way the Federal Reserve bank now handles electronic transactions,
nearly all banks can offer free or very inexpensive tools to all
businesses, including small businesses.
Remote Check Capture
- This is a service where the bank either puts a machine in your
business at no cost or has you buy a compatible machine that reads the
front and back of checks for deposit. Think of it as your bank’s branch
in your own place of business. With check capture, you do the work for
the bank teller, but with less hassle than you have now making paper
deposits. If your business doesn’t handle much if any cash, you should
seriously consider this program.
Benefits include:
No
commuting back and forth to the bank during the critical part of your
day so you can make a deposit before the bank’s daily cut-off. This is a
big advantage because it also allows you to bank with an institution
many miles away. Instead of picking a bank because it has a branch close
to your place of business, you can pick a bank based on the services it
offers.
Most
systems capture an image of the front and back of every check you scan.
This image is what is transmitted through the Federal Reserve Check
Clearinghouse. Once you have scanned a check it is in the system. Most
systems are automated so they can read the amount of the check and build
an electronic deposit slip. As you scan checks you simply correct any
mis-read figures so each check is properly recorded. This lessons the
chance of deposit errors when you have large volumes of checks.
Most
systems allow you to store all deposit transactions online or archived
to a CD-ROM. This in turn makes it possible for you to easily go back
and see what the original item looked like.
Lastly,
many banks give you later cut-off times if you use check capture. They
are doing this to make it more attractive to use the service, but it
also saves them time and gives them greater time to close their day.
ACH Debit
- This is a service where you can debit funds out of another bank
account (assuming you have been given the authorization). Banks
typically provide an online interface where you can enter a one time
batch or single debit transaction. My favorite way to use ACH debit is
as a collection tool. Your customer owes you money and you are able to
get them to agree to pay an amount right now. You simply enter the
amount, the other party’s bank routing number, and their account number.
Once you have indicated a date for settlement the money will be moved.
Typically the method used is called “one day ACH.” Recurring debits are
ones that occur for the same amount at regular intervals.
ACH Credit
- ACH credit is the opposite of ACH debit. Similar to online bill pay,
you have a vendor, employee or other party to pay and you want to do it
electronically. Simply get the other party’s bank routing number,
account number and you can set up an electronic transfer. It is not a
wire transfer that happens during the same day instantly, but it will
happen by the end of the next banking day. This allows you to hang onto
your money as long as possible and time the payment to get to your
vendor at the last day to be within terms. Cash flow can be improved and
your vendor’s bank won’t have any collection time for funds to clear.
If
you aren’t using these services you should at least look at them and
consider the benefits. Many banks don’t charge anything to use ACH debit
and credit and some banks will provide the remote check capture
equipment to you at no cost.
Sam Thacker is a partner in Austin Texas based Business Finance Solutions.
His direct email addresss is: sam@lesliethacker.com
Twitter: @SMBFinance
