Managing working capital can be vastly complex, but your bank’s treasury management professionals understand those complexities and can work to help you and your business implement effective solutions.
Treasury management solutions may help manage corporate cash resources, reduce administrative burdens, speed collections, manage payments, facilitate cash flow, mitigate risks of fraud and make corporate capital work harder, says Jennifer Hall, treasury management specialist at Associated Bank.
“Treasury management solutions run the gamut from picking the right deposit products, moving to electronic payments to investing idle balances,” says Hall. “And some of the most crucial tools are those that help protect businesses from the negative impacts of fraud.”
Smart Business spoke with Hall about how treasury management solutions can help protect your business and how reducing the risk that your business faces can directly affect your net bottom line.
How can businesses reduce their risk of fraud?
Some of the most crucial tools are those that help protect businesses from the negative impacts of fraud. That is critical, as a 2011 Association of Financial Professionals Payments Fraud and Control survey indicated that 71 percent of organizations surveyed had experienced attempted or actual payments fraud in 2010, with an average loss of $18,400.
Paper-based check fraud is far more common than electronic payments fraud is, striking 93 percent of those businesses in the survey that experienced attempted or actual fraud. Check loss prevention tools can help mitigate the risk of check fraud loss by identifying potentially fraudulent checks before a loss is incurred. That entails a daily reconcilement of a company’s issued checks against checks presented for payment to the bank. When a check reaches the bank for payment, it is compared against the file of checks issued from the business, and any discrepancies trigger an alert. The business then verifies the details of the checks on the discrepancy report and decides to either pay the check or stop/return the checks.
How can a business optimize its cash?
Information services, or online banking, provides a detailed transaction history and balance summary information to assist in making decisions about optimizing cash on a daily basis. A quick glance at cash on hand can support decisions to advance or pay down a line of credit, or to move funds into an investment account. Online banking can save time by taking advantage of the ability to move money between accounts or by originating external payments electronically.
Online banking can also be the first line of defense for mitigating the risks of fraud. Encourage dual control for peace of mind; monitoring activities delegated and performed by other members of the staff and daily monitoring of transactions can lessen the risks of both internal and external fraud.
A type of daily reporting service called controlled disbursement may help maximize working capital. Typically, you’re notified by 11 a.m. each day of all checks that will clear against the account on that day. This allows you to precisely calculate how much money to transfer to pay down a line of credit or to invest, removing the check clearing uncertainty from your daily cash flow forecasting.
How can a business speed the collection of money it is owed?
Remote deposit capture service can improve a company’s workflow productivity by streamlining collections and cash flow.
Employees no longer have to drive to a branch to make a deposit into your business account. Instead, you can scan and deposit checks electronically from the convenience of your office. Virtual deposit tickets and endorsements allow remote deposits to be more efficient than manual deposits.
Making deposits this way can speed the availability of funds by extending your deposit cutoff times for same-day ledger credit. In addition, the image technology provides quality control by reducing the risk of errors, and the data may be exported directly to other accounting systems.
Outsourcing receivables collections to your bank can also reduce the costs associated with the processing of accounts receivable. Automated receivables posting can identify who made the payment, the invoice number and the dollar amount, and then integrate the information directly into the company’s account receivable system. In some cases, reducing the processing time of receivables results in information and/or funds being available days sooner.
How can electronic payments increase efficiency?
Electronic payments, or ACH, can save time and may reduce errors by avoiding manual processing of payments. There is an industry trend in which more and more business-to-business payments use ACH. It is primarily used for direct deposit of payroll, but increasingly, business that may be focused on going green, or that are possibly looking to trim administrative costs and reduce the cost of printing and mailing paper checks are using it for other payments, too. Doing so can improve efficiency in receivables and payables processing.
In addition, corporate credit card services, such as the ‘one card’ solution, can combine the benefits of a purchasing card and a travel/expense card into one flexible card. This solution may reduce time and cost in tracking, reconciling and managing travel/expense and purchasing costs. One cards have a built-in general ledger system that can simplify the accounts payable process. And some one card solutions also offer rewards.
A bank’s treasury management professional can help you implement the services that will be most helpful to your organization and its bottom line.
Deposit and loan products are offered by Associated Bank, N.A. (“AB”), Member FDIC and Associated Banc-Corp (“AB-C”). Loans subject to credit approval. Equal Opportunity Lender.
Jennifer Hall is a treasury management specialist at Associated Bank. Reach her at (312) 565-5275 or Jennifer.Hall@associatedbank.com.