Most businesses use online banking in some capacity, but not all of those are taking advantage of the tools available.
The value of online banking goes deeper than just the convenience of tracking your cash flow. Through online banking, businesses can improve productivity, quicken access to cash, transfer funds between accounts, initiate wire transfers, pay vendors and more, says Roger Schnorr, senior vice president of business banking, Old Second National Bank, Aurora, Ill.
“Online banking makes good fiscal sense to any business as there is less time and effort involved in every transaction,” says Schnorr. “It’s safe and simple; in short, it’s smart money management.”
Smart Business spoke with Schnorr about how businesses can get the most out of online banking tools to save both time and money.
How can a business use remote deposit capture to improve efficiency and cash flow?
Remote deposit gives businesses the ability to deposit checks by using scanning hardware and online scanning banking software. The bank provides the scanner, which is about the size of a typical toaster. The scanner is connected to the office computer.
The business can scan checks at any time and deposit funds into any number of accounts. The scanning device simply reads the check and deposits it into the specified account.
The real benefits of this tool are same-day credit of funds and the time savings that results from depositing checks remotely rather than having to make a trip to the bank. With faster access to funds, a business can use that money to pay down debt or invest it in interest-bearing accounts.
Ultimately, remote capture can enhance cash flow and accelerate the pace that money is deposited into an account, which is a good thing.
What system should a business put in place to maximize online banking?
One system a business may want to include is Bill Pay, where it would be able to pay bills online. Once the payees are set up, it would take very little time to pay bills, which can help the business owner in better time management.
That said, a company can authorize other individuals to use online banking, just as it would authorize people to sign checks. Online account access may be granted to your chief financial officer, treasurer or whoever manages the books.
How can a business owner be sure that its online transactions are protected from fraud?
Banks are heavily invested in security to ensure that all customers are protected from fraud. The company authorizes certain employees to initiate and approve the wire request. The employees are each given a secure token that works in conjunction with their password.
Another added security feature is using dual control, which eliminates one person from being able to send an outgoing wire without another person doing the approval.
Beyond this, there are tools businesses can utilize as checks and balances to prevent fraud, one of which is Positive Pay. Positive Pay is a popular cash management tool that banks provide to prevent check fraud. The customer issues the bank a file with check numbers and dollar amounts for all checks issued. The bank only pays items with serial numbers and dollar amounts matching the company file.
Positive Pay is an additional stop-gap for fraud in addition to a company’s existing measures.
How can a business use online services to wire money quickly and safely?
Here again is where online banking shines as an efficient, effective and secure tool for transferring money. Online wire transfers allow businesses to initiate their own wire transfers without stepping foot into the bank, which is a real convenience.
This service is becoming more popular with businesses of all sizes that need to transfer funds without the need to leave the office. The bank will only accept transactions initiated by employees the company has authorized, so the company can rest assured that the transfer is safe.
How do sweep accounts work with online banking?
The ability to sweep funds between accounts allows the company to best manage its cash. Say the company maintains a noninterest-bearing operating account and a money market account that pays interest.
A balance threshold is determined in advance. Funds that exceed that threshold are then swept into an interest-bearing account.
The sweep account also may be set up to sweep excess funds toward a line of credit. Automated principal paydowns will reduce the company’s interest expense.
All of these features and functions will give the company the freedom to manage its funds more efficiently, with the convenience of banking when and where desired.
Roger Schnorr is senior vice president of business banking for Old Second National Bank in Aurora, Ill. Reach him at firstname.lastname@example.org or (630) 844-8557.