How bank treasury management services can improve cash flow Featured

8:00pm EDT June 25, 2010

In a challenging economic environment, improving cash flow becomes more critical than ever, with customers paying more slowly and suppliers tightening credit terms. Also, staffing may have been cut, leaving fewer people to accomplish the vital work of the organization and keep close watch on the financial picture.

“Treasury management services provide critical information and enhance efficiency, helping business owners and their employees manage cash in less time, without sacrificing quality,” says Lori Wood, a treasury management officer with FirstMerit Bank.

Smart Business spoke with Wood about treasury management services and how they can be used to improve cash flow and enhance overall business.

How are treasury management services used to improve cash flow for businesses?

Treasury management services are used by companies to collect and move funds more efficiently. Automated services can transfer funds between checking accounts and lines of credit to minimize interest expense and the time spent monitoring and moving cash. Online services provide immediate balance and transaction information so financial managers can make informed business decisions on the spot. Online banking can also include various types of electronic money movement, including wire transfers, direct deposit and account transfer.

A traditional treasury management service that many businesses benefit from is a lockbox. With this service, the bank provides a business with a P.O. Box address for their customers to send payments to. The bank picks up the mail and deposits the checks directly to the business’s account. Current lockbox services notify companies of the payment details, and provide check and invoice images via the Internet. A lockbox ensures a daily deposit without traveling to the bank and improves mail delivery time, making the collection process quick and easy.

By relieving the business of the clerical tasks involved with bank deposits, the company allows its employees to focus on business specific tasks, such as collections or sales.

How have new technologies enhanced treasury management services?

Remote deposit capture utilizes new technology and increases efficiency for many types of companies. This service allows a company to scan checks on a special scanner at their place of business and send images of the checks through the Internet for deposit. Besides avoiding trips to the bank, remote deposit usually provides more time for deposits to be completed than typical branch banking hours. Retention of the check images online can enhance customer service opportunities as well. There are various price points for high or low volume remote deposit, making it a great option for a variety of businesses. In some cases, information gathered as the checks are scanned is captured in a data file to integrate into the accounts receivable system.

Of course, technology has not completely eliminated human interaction, service or guidance. Bankers are still available to meet with clients to help them decide which services are best for their company and evaluate financing and investment options. Treasury services simply enhance the banking relationship and make the cash management process more efficient.

Why are these services worth the financial investment?

Most banking services will have some cost involved. The key is to compare the cost of the service to the cost of handling the processes in-house. Think of it this way: could the time spent manually processing deposits and banking transactions be better used on actions that are more productive and beneficial to the business?

A business owner who is hesitant regarding the costs of these types of services might think back 10 years when cell phones were just being adopted for business use. Many people were reluctant to invest in cell phones initially, but it wasn’t long before most people realized the cost of a cell phone was minimal compared to the value of the work that could be accomplished and the time saved by being connected on the go. The same can be said for treasury management services: the value of saving time and labor while working more efficiently is well worth the cost.

Treasury management services have been prevalent in large companies for many years. Today, Internet access has decreased the need to purchase sophisticated software, thus decreasing the cost of implementing a cash management program. Now, businesses of all sizes can afford some level of service, and reap the benefits that treasury management offers.

Lori Wood is a treasury management officer with FirstMerit Bank. Reach her at or (614) 545-2787.