Ryan Burgess

Thursday, 31 October 2002 10:16

Locked in

For the business owner looking to increase efficiency and gain access to payments more quickly, a lockbox may be the answer.

Lockboxes are a unique post office box used for invoice payments. They are a means of accelerating the cash collection process by converting accounts receivable to cash.

When you go to the doctor, you expect to be billed. Upon receiving the bill, you send payment via mail to the office, where employees open the mail, take your check to the bank and reconcile the account. This can be extremely time consuming.

By using a lockbox, companies can outsource payment collection to a bank. The bank assumes the function of collecting your accounts receivable. Customers mail payments to a unique ZIP code and post office box instead of to your office. Your bank picks up remittances from the post office several times a day.

Items are sequenced and prepared for processing according to the business' specifications, including an audit of items to ensure negotiability of checks. A daily transmission file is posted to the business's accounts receivable system, and checks are deposited into its checking account.

After the money is deposited, remittance information and copies of checks are sent via courier or mail to the company.

Companies should consider a lockbox if they:

* Receive payments by mail

* Process payments at multiple locations

* Invoice for accounts receivable

* Want to improve funds availability

* Strive to avoid capital investments in nonrevenue producing assets

* Want to improve customer service

With a lockbox solution, your company benefits with an improved availability of funds due to accelerated collection. Additionally, outsourcing lockbox functions to a bank allows employees to focus on other business matters.

Most banks allow you to customize the method of processing your lockbox items.

Lockbox imaging is also available. With this service, business owners can make timely business decisions because images of checks, remittances and correspondence can be retrieved quickly and conveniently on a secure Internet site from a desktop computer. Images are available the same day and can be exported for archiving, research and customer service purposes. Check and remittance information can be downloaded from the bank's Internet site into accounting software programs, saving time when reconciling bank statements.

Online lockbox imaging is an ideal solution for companies that have time-sensitive issues and wish to post to receivables the same day, have a high volume of invoices paid by check and have a high average dollar amount per check. Companies that are required to furnish payment documentation to field services and have receivables that contain multiple explanations of benefits are also excellent candidates.

Business owners often think lockbox banking is only economical for large companies. But because automatic payment processing has become a standard in the banking industry, there are options for companies of all sizes. Your local bank can offer your business the right lockbox solution to fit your needs at a competitive price.

If your business is seeking to access money more quickly, reduce the amount of paper and save time for employees allowing them to focus on functions that generate more revenue, consider taking advantage of lockbox services to streamline your operations.

How to reach: Ryan Burgess is vice president and manager of Corporate Treasury Management and Public Funds for Fifth Third Bank, (614) 341.2583 or ryan.burgess@53.com.

Tuesday, 26 February 2002 12:47

The risk within

During an economic slowdown, growing top-line revenue is challenging for small businesses. Fraud can make matters worse by decimating income before it ever makes it to the bottom line.

Here are some simple steps to mitigate the risk of fraud.

* Know your employees. A thorough background check reduces the possibility of internal problems.

* Maintain a secure location for checks, deposit slips and bank statements, and restrict access to them.

* Find a reputable check printer that offers security features for checks, such as a watermark, that makes them difficult to replicate. Don't use generic, blank check stock, which can be easily duplicated.

* Verify that strong internal accounting controls are in place. Separate check writing and reconciliation responsibilities in your accounts payable department so that one person doesn't have access to the entire process.

* Reconcile your bank accounts monthly. If a discrepancy is discovered long after the check was issued, your company could be liable for the loss.

* Set dollar limits on checks, and require more than one signature on high-dollar checks.

* Watch for checks made out to cash or those cashed out of sequence, which could indicate renumbered, counterfeit checks.

* Shred documents that contain account numbers or other sensitive financial information.

How to reach: Ryan Burgess, Corporate Treasury Management and Public Funds, Fifth Third Bank, 341-2583 or ryan.burgess@53.com

Friday, 31 May 2002 12:20

Purchasing card pointers

E-commerce, e-mail and cell phones have removed a tremendous amount of paper from our monetary system and daily lives, but we still handle more paper than we need to. One financial tool that can reduce paperwork is the purchasing card.

Companies have historically handled different types of expenditures by using corporate credit card vendors and paper-based processes. Different categories of expenses, including office supplies, training expenses, business travel, client entertainment and vehicle maintenance are paid with different credit cards, creating more work than is necessary.

A purchasing card consolidates multiple corporate cards into a single card used to purchase most goods and services. The card's system assigns an identifier to each transaction, much like a bar coding system at the grocery store. The identifier provides a detailed description of who made what purchase and where and when it was made. Each employee's card is programmed to control expenses through pre-established limits, customized for each cardholder.

Purchasing card solutions have several benefits. Employees who carried multiple credit cards can now use a single card for any business purpose. Employees no longer have to decide when to use which card, eliminating confusion and decreasing reliance on other forms of payment, which often are more expensive to process.

Secondly, a purchasing card program can result in increased savings by centralizing the administration and support of the program. One monthly invoice can be processed for all your employees' expenditures, and you will get more and faster information with online reporting features.

A purchasing card program allows for the centralization of data, making it easy to obtain information. More accurate data enables managers to more precisely develop complete spending pictures, which improves their ability to negotiate and secure better pricing from vendors.

Many users of a purchasing card program utilize online expense reporting and card reconciliation, which streamlines processes, improves policy compliance and reduces expense report delinquency rates. Online reporting saves time in business planning and expense budgeting, financial analysis and preparation, and review of routine management reports. It also allows integration of transaction data into existing accounting systems, monitoring of company spending at cardholder or management levels, management of suppliers and generation of standard reports.

To fully take advantage of the information reporting features, you'll need a software system to categorize expenses and chart them against budgets, the general ledger, accounts payable operations and other computer systems. The system can then divide data into individual transactions and direct each transaction to the correct employee and approver, flagging questionable expenses.

Even if you don't utilize online information reporting systems, the purchasing card program can reduce the amount of paper by issuing a single, consolidated report for all employees, as opposed to reports for each individual employee.

You may want to consider a purchasing card program if your company:

* Uses multiple credit cards.

* Wants to increase control of corporate expenses while retaining cardholder flexibility.

* Wants to minimize exposure to check fraud.

* Wants more and faster information regarding your corporate expenses.

* Seeks to simplify the reconciliation process.

Carefully weigh the benefits and potential issues related to the implementation of a purchasing card program to determine the right solution for your unique needs. Ryan Burgess is vice president and manager of corporate treasury management and public funds for Fifth Third Bank. Reach him at Fifth Third Bank, (614) 341-2583 or Ryan.Burgess@53.com.

Monday, 24 May 2004 13:12

Check 21

With the advent of the Check Truncation Act (Check 21), it is important to understand how this legislation will impact the financial controls of your business. Failure to do so could leave your company vulnerable to financial fraud.

Check 21 will lead to dramatic changes in the payments industry by encouraging banks to reduce the amount of paper in the banking system. Instead of paper checks, banks will exchange electronic images. However, check fraud can still occur if you do not take simple steps to mitigate the risk.

The Association of Certified Fraud Examiners' Report to the Nation found that fraud and abuse cost U.S. organizations more than $400 billion annually. The report also found the most costly abuses occurred in organizations with fewer than 100 employees. Increased affordability of personal computers, laser printers, color copiers and scanners enable criminals to easily perpetuate check fraud.

Losses not only include the amount of the fraudulent check(s), but also administrative time and paperwork, considerable aggravation and worry, and the cost of any efforts to recover lost funds. A single incident of check fraud is likely to cost a business more than the basic fraud prevention measures that could help avoid it.

Recent changes to the law make it extremely important for a company to actively protect itself against check fraud. Businesses now share responsibility for preventing fraud. For example, if checks are stolen from a company and cashed, the company may have to absorb the loss.

Businesses that can demonstrate actions have been taken to prevent fraud are better protected against liability in loss disputes.

There are several steps you can take to lessen the risk of fraud. Here are a few.

* Know your employees. The Report to the Nation found that the average organization loses about 6 percent of total annual revenue to fraud and abuse committed by its own employees. Regular open communication between managers and employees about how fraudulent activities can be prevented can significantly reduce losses from check fraud.

* Maintain a secure location for all checks, deposit slips and monthly bank statements, and restrict who has access to them.

* Find a reputable check printer that offers security features such as a basic watermark. Do not use generic blank check stock, which can be duplicated easily by fraud artists. Your financial institution can recommend trusted vendors.

Check 21 will make it even more important to have the proper type of checks printed to enhance the electronic image of the check you will receive from the bank.

* Ensure strong internal accounting controls are in place. Separate check writing and reconciliation responsibilities so that one person does not have access to the entire process.

* Reconcile your bank accounts each month. If a discrepancy is discovered long after the check was issued, your company could be liable for the loss. Talk to your banker about how you will receive your check and account information, since eventually paper checks will not be part of the reconciliation process due to Check 21.

* Set dollar limits on checks, and require more than one signature on high-dollar checks.

* Watch for checks made out to cash or checks that are cashed out of sequence, which could indicate there are renumbered, counterfeit checks.

* Shred documents that contain account numbers or other sensitive financial information.

Bank partnerships

There are also fraud prevention steps you can take through a partnership with your bank. Positive Pay is an automated service that monitors checks written and detects unusual or unauthorized activity. The bank reports any suspicious or unauthorized items to the business customer, who determines if a check should be paid. Historically available to larger organizations, Positive Pay is now also available to small businesses through online banking programs.

Consider direct deposit. Direct deposit of payroll will lessen the possibility of an employee losing a paycheck that can later be used to craft a counterfeit check, and will reduce the number of checks issued by your company. And direct deposit is much more cost-effective than issuing payroll checks.

Prevention is a small business owner's best weapon against fraud. Understanding the impact of Check 21, taking simple steps and investing in a few effective tools to fight fraud will pay big dividends in the long run. Ryan Burgess is Vice President of Corporate Treasury Management and Public Funds for Fifth Third Bank. Reach him at (614) 744-7583 or ryan.burgess@53.com.