As technology, banks and businesses have become more sophisticated, many businesses are discovering that online banking has applications that go beyond simply monitoring balances and transferring funds among accounts.
Businesses with tight cash flows may still need to check daily account balances, and those with cyclical or seasonal income may want to continue to use online banking services to help them decide whether to pay down debt or invest excess funds. At the same time, companies may also want to investigate some of the less obvious benefits of online banking.
Businesses that expand their online banking presence may appreciate the following.
- Fraud control. Online banking can be used to monitor checks presented to an account for payment. In some cases, businesses submit a list of checks written on the account and banks use that list to check against the actual checks presented for payment.
In other instances, businesses receive a list of the checks presented for payment and authorize those that are legitimate. In either scenario, suspect checks are identified quickly and can be investigated.
- Improved document storage. Online banking often offers e-statements or statements on CD-ROMs that help eliminate tedious and costly check storage and document retrieval. Most banks keep records available online for 60 to 90 days, then send statements for permanent archiving.
Receiving statements on CDs means bulky file cabinets or off-site storage can be eliminated. It also means employees aren't required to sift through 1,000 checks in a storage facility to find the one that's needed.
- Receivables processing with images. Businesses that use a lockbox system to accept payments can receive actual images of the documents on the same day they were processed. In the past, manually typed records were posted online, while actual records were mailed, overnighted or couriered to businesses.
That created delays in posting and additional expenses that imaged records eliminate.
One thing to consider is that while online banking is appropriate for every company, not all online banking features are good for every business. As with any other business decision, managers should consider what level of online banking best suits their company.
Most banks offer three or four online banking products, with fees from $5 or $10 per month to $200 or more; additional components carry additional fees. While it is easy to get caught up in the wealth of highly effective technology that is available, businesses need to be objective in evaluating which processes they will actually use in order to avoid overpaying.
Smaller firms that issue only 10 or 15 checks each month, for example, may not benefit enough from receiving statements on CD-ROM to justify the cost.
One concern about online banking that has largely disappeared is security. Virtually all banks use military-grade encryption and secure socket layers (SSL) for transmissions, which means transactions are very safe. Businesses can add an additional layer of security by creating complex, random passwords that include alpha, numeric and special characters (j1h#ill2*, for example).
That concern has been replaced by worry over check fraud, which is why systems such as Positive Pay that allow businesses to scrutinize checks before they are paid are becoming more popular.
The economic wave of the future seems clearly to be moving away from checks completely and into electronic banking, but until that transition is accomplished, businesses could end up paying part of the losses attributed to fraudulent checks.
Online banking can help prevent such expense -- and boost productivity and speed bookkeeping at the same time. Judy Hill is senior vice president in charge of treasury management at MB Financial Bank. Reach her at (312) 633-0333 or through the company's Web site, www.mbfinancial.com.