Establishing an efficient accounts receivable process is a critical step for most businesses, which can necessitate a major balancing act, says Jennifer Hall, senior vice president, middle market sales director, Commercial Deposits & Treasury Management, Associated Bank.

“You and your customer likely have different goals,” says Hall. “You want to receive payment as quickly as possible for the products and services you’ve delivered. Your customer, on the other hand, wants to delay payment as long as possible. You need to come up with solutions that are acceptable to valuable customers while minimizing the time you have to wait for payment and the risk of nonpayment.”

Smart Business spoke with Hall about how to strike a balance when it comes to accounts receivable.

Why is developing an efficient accounts receivable process so important?

How quickly receivables are paid directly affects your cash flow, and properly balanced cash flow is essential for stability. The faster you can collect outstanding receivables, the faster the cash can be spent to meet payroll and other expenses, pursue expansion and investment goals, or enhance company profits.

Collection delinquencies make it difficult to forecast cash flow and may mean the business has to create a bigger cash cushion than it otherwise would in order to deal with slow payments and still meet its obligations.

How can a business evaluate its risks?

First, run credit checks so that you can set up payment terms accordingly. A customer with less-than-stellar credit may need to pay more up front, whereas a reliable customer may earn an extended payment arrangement.

Second, anticipate and prevent late payments. Automatically monitor your receivables aging. Are there customers whose payments routinely lag? Do you have a goal for new customer collection periods? Perhaps you could negotiate discounts for early payment or institute a down payment plan so some cash comes in early. With new customers, set expectations for credit and collection terms up front and act swiftly to collect when a payment is past due.

Monitoring your accounts receivables closely allows you to quickly identify trends in payment behavior. If a customer routinely pays on time but has had months of late payments, this could be a red flag. Perhaps it is in financial trouble or is losing confidence in you as a supplier. Either way, it merits a call to see if there are steps that could prevent future problems.

Third, spread the risk. If your business is dependent on the payment timeliness of a few large clients, you are at greater risk than if receivables are more evenly spread across many smaller ones. If one large trading partner goes bankrupt or develops erratic payment habits, your ability to predict and efficiently manage your cash flows may be significantly affected.

Another risk occurs when you are a supplier to a major corporation with the clout to demand payment terms that involve not only deep discounting but also significantly extended payment timelines. Factor these payment arrangements into your cash flow planning.

How can a business manage its orders and minimize it receivables conversion cycle

Make it easy to buy. Ordering should be quick, easy and accurate. Expedite the purchasing process. Also provide immediate payment options and offer phone assistance. Having someone to answer questions can increase your order completion rate, and customer service representatives can suggest complementary products, resulting in incremental sales. Also discourage orders via traditional mail, which increases the receivables cycle. Finally, provide timely product shipments or service completion. The timely conversion of orders to cash can be sabotaged by internal inefficiencies or lack of precise knowledge of production metrics. Defining and measuring important targets allows you to prevent critical product or service shortages.

How can a company streamline receivables?

Strive to invoice within 24 hours of shipment because the customer won’t begin the payment process until the invoice is received.

Make invoices simple. They typically go to the accounting group, so superfluous information is a waste of time and money and can confuse the main point — the amount due. To speed payment, make it easy for the customer. Here are some treasury management products and services that may help.

* Electronic payments and deposit. Reducing paper transactions can speed payment. By using electronic solutions such as automated clearinghouse (ACH), wire payments and credit cards, the time between delivery of the product or service and payment is minimized.

* Lockbox services. For businesses that receive a large number of check payments or large dollar check payments, lockbox services can streamline the process and reduce the time from check receipt to deposit. Checks are sent directly to a remittance address owned by the bank and retrieved multiple times each day to expedite payment processing, minimizing mail, processing and information float while maximizing funds availability.

* Remote deposit capture. This accelerates paper check deposits into your business account. Scan checks at your location to create a digital file that is sent to the bank over a secure Internet connection. This reduces mail and check float and allows you to export data directly into your accounts receivable system.

* Online information reporting. Simple report statements, CD-ROMs containing lockbox images, both data and image transmission files that can be uploaded into your accounts receivable or ERP systems, and online and Web-based information delivery services can provide timely and convenient access to your account information.

No matter how healthy your sales, an inefficient or ineffective accounts receivable process can hinder growth. A treasury management expert can evaluate your receivables needs and suggest cash management solutions to streamline receivables processes and improve cash flow.

Associated Bank, N.A., is a Member FDIC and Associated Banc-Corp.

Jennifer Hall is senior vice president at Associated Bank. Reach her at (312) 565-5275 or

Published in Chicago

After the past few years of pay cuts, pay freezes and meager —- if any —raises, signs of economic recovery have given many workers the confidence to hunt for new opportunities outside of their current organizations.

Fearing the loss of top talent, business leaders are taking action to stem the turnover: More than 98 percent of companies awarded base pay increases in 2011, with an average increase of 2.9 percent — up from 2.7 percent last year, according to a press release by Mercer.

“The stakes are high,” says Michael Engelhardt, benefits consultant, Associated Bank. “High turnover can undermine efficiency and effectiveness, sabotage employee morale and send recruiting and training costs skyrocketing. Low turnover, on the other hand, can increase salary expenses, which, in turn, can make it difficult to maintain adequate staffing levels and may lead to lower productivity if workers become complacent in their positions.”

One way to determine whether your compensation plan is competitive in both your industry and your region — and whether it is sufficient to keep key talent from fleeing or becoming too comfortable — is to benchmark it. A thorough knowledge of how your pay rates and benefits stack up with similar positions at other companies can help you attract and retain talent, keep a competitive edge, perform annual performance reviews and manage your bottom line.

Smart Business spoke with Engelhardt about how compensation benchmarking can help you control turnover of key employees.

How can companies get started with benchmarking compensation?

Start with job descriptions. Having thorough descriptions of each position ensures that you’re able to match skills, responsibilities and experience for each job, rather than titles alone. And don’t go it alone; ask employees and managers for their input on the descriptions, as they are most likely more familiar with the duties of each position.

Choose your data carefully. Among the variety of compensation survey data available today, not all are created equal. Be sure to select surveys that offer good coverage of your industry, location and type of organization, which may entail using several survey sources. Pay attention to how the data is collected, its effective date and any geographic differentials. Aim to match job descriptions closely — 70 percent or more matching responsibilities is ideal.

Which positions should a company benchmark?

Select the positions carefully. Don’t expect to be able to benchmark all of the positions in your organization. Instead, choose positions that are standard across industries, such as accountant or administrative assistant, or that are consistent within your industry, such as registered nurse. For hybrid positions, consider comparing those with other positions that require similar skills, responsibilities and decision-making within your organization when making compensation decisions.

What do companies need to consider beyond monetary compensation?

Pay alone may not keep key talent satisfied and loyal. Regular evaluation of efforts to retain, motivate and engage employees is critical in striking a balance between mass exodus and employee stagnation.

It isn’t just about benchmarking pay; it’s also important to benchmark your overall compensation/benefits package. Look at the whole story of what you offer as an employer. Your benefits provider may be able to provide benchmarking data, so ask if the provider can benchmark how competitive your benefits package is by region and size of company. The provider should also be able to tell you the most common plan design, average employer contribution and what products are offered.

Because pay and other hard benefits are only one part of assessing competitive compensation, employers also should consider incentives, professional development opportunities and work-life balance. Softer benefits such as flexibility, understanding workloads and rewarding people in the way they want to be rewarded also fall into the compensation bucket. Now, more than ever, companies need to get creative with their benefits, because even though the economy seems to be moving in the right direction, it’s still really skinny for a lot of employers. And the truth of the matter is that hard money doesn’t typically bring loyalty or satisfaction, and it isn’t the only direct link to productivity.

Employees can likely dismiss the fact that they are not the most highly paid employee in this position, in this market, if they get to perform rewarding work. Being able to connect their work to the strategies of their company and feeling like they are part of something bigger can also be a source of satisfaction. Giving workers a positive environment is also valuable. For example, provide opportunities for professional growth, encourage strong relationships with managers and offer flexibility. It is important that employers not underestimate the power of those types of conditions to create loyalty.

How do you determine what is important to your top talent?

Ask them. The most important thing when you’re trying to avoid losing key talent is to create an environment in which you can have a nonthreatening conversation about compensation. If you’re concerned about employee loyalty, ask your employees what’s most important to them and where the gaps are.

Survey your employees to garner valuable information to help guide your compensation decisions. <<

Insurance products are offered by licensed agents of Associated Financial Group, LLC. (“AFG”). • Insurance products offered are NOT deposits or obligations of, insured or guaranteed by Associated Banc-Corp (“AB-C”) or any bank or affiliate, are NOT insured by the FDIC or any agency of the United States. • AFG is an affiliate of AB-C.

Deposit and loan products are offered by Associated Bank, N.A., Member FDIC and AB-C. Loans subject to credit approval. Equal Opportunity Lender.

Michael Engelhardt is a benefits consultant at Associated Bank. Reach him at or (630) 966-4586.

Published in Chicago

In light of the slow recovery of the economy, you may not be ready to commit your business to an expansion. But many analysts remain optimistic that the economy will continue to improve.

However, a plan to expand and move into new space may be in your organization’s not-too-distant future. That makes now a prime time for evaluating how to proceed when you’re ready to pull the pin, says Gregory T. Warsek, senior vice president/regional manager, Commercial Real Estate Division, Associated Bank.

“A primary decision is going to be whether to buy or lease office, retail and/or manufacturing space,” says Warsek. “Financial considerations may be of prime importance, but don’t overlook other consequences of your decision. There are pros and cons to buying and leasing, so be sure that you review your options carefully and discuss them with your financial team.”

Smart Business spoke with Warsek about how to determine whether leasing or buying is the better choice for your business.

What are the benefits of buying?

First are the tax benefits. The interest on a mortgage and property taxes may be tax-deductible, the property may be depreciable and costs associated with owning a commercial space may be deductible. Talk with your tax attorney or adviser to see what tax breaks you may be eligible for.

Buying also gives you greater freedom to convert the space to your needs, allowing you to build on, tear down or reconfigure to meet your needs. In addition, there will be no rent increases. Locking in a commercial mortgage can give your business a clear idea of future costs. And should you decide to sell, you may make a profit if the value of the property has increased. Ownership also creates the potential for additional income. If you buy or build a multi-tenant building, you can enjoy an income stream from rent paid by other tenants.

What are the drawbacks of buying?

Buying creates more upfront costs. Initial capital outlay includes down payment, possible property improvement costs, and appraisal and maintenance costs. Evaluate the opportunity cost of those dollars being spent in other ways. It also puts the property on your balance sheet, which may create future borrowing restrictions resulting from real estate debt. And it creates a lack of flexibility, making it difficult to adapt quickly to changes in your market. It takes time to plan and construct or purchase a property or to sell a property. For businesses whose success depends on location, owning may make it more difficult to adapt to market shifts.

Owning also creates operational costs, and the time and energy devoted to maintaining a property can be a distraction. If you buy a multi-tenant building and lease space, consider how being a landlord fits with your primary business. If you don’t want that responsibility, leasing may be the better option.

What are the benefits of leasing?

Leasing is easier on a business’s cash flow. When you buy, you tie up a significant amount of equity. Leasing doesn’t require as large an outlay of capital at the outset. Not having money tied up in real estate frees up working capital, allowing your business to respond to other opportunities in the market. Leasing also makes it easier to move into prime locations and eliminates the headaches of selling if the area cools. Also, the rent a business pays on a lease may be tax deductible.

What are the drawbacks of leasing?

Leasing subjects you to uncertain costs, as you may be subject to rent increases when your lease expires. Some leases also allow for annual increases tied to changes in the Consumer Price Index.  There may also be restrictions on adapting the space to your needs. If you find that the space no longer meets your needs, your only option may be to move. Leasing also makes you dependent on a landlord, who may decide to terminate your lease if it has other plans for the property.

The answer to lease or purchase commercial space is not clear-cut; it melds market, tax and financial analyses with other business considerations. Discuss your situation with your company’s finance team, commercial banker and tax adviser to make the most informed decisions about buying versus leasing.

How can environmental cleanup responsibilities impact your decision on whether to buy or lease?

Almost every real estate deal carries some risk of environmental liability. For much of the 20th century, the standard method of waste disposal was to bury waste or dump it in a nearby waterway. This resulted in thousands of contaminated properties nationwide. A purchaser or lessee could be held responsible for remediation costs, even if it did not cause the contamination.

Remediation has the potential to be very expensive and time consuming. Before acquiring or leasing a site, be sure to conduct an effective audit by referring to a records review or invasive testing. Also consider environmental liability insurance, which can be designed to protect the buyer, seller or both against unknown risk. Another option is a cost cap or stop loss policy, which puts a ceiling on the actual cleanup cost of the site.

It’s a good idea to consult an attorney to negotiate provisions in the contract or lease that minimize your exposure and risk of environmental liability. Some possible protections include lengthy due diligence periods, representations and warranties regarding hazardous materials, indemnification provisions, carefully drafted provisions regarding responsibility for cleanup, remediation and monitoring, and holdbacks or other security for future performance.

Loans subject to credit approval. Equal Opportunity Lender. Associated Bank N.A. is a Member FDIC and Associated Banc-Corp.

Gregory T. Warsek is senior vice president/regional manager, Commercial Real Estate Division, Associated Bank. Reach him at

Published in Chicago

As more and more businesses enter the global marketplace, a question they all want answered is, “What’s the outlook for foreign exchange rates?” Businesses want to know the direction that the currencies of their trading partners are headed in relation to the U.S. dollar, but no one knows. Former Federal Reserve Chairman Alan Greenspan once said, “To my knowledge, no model projecting directional movements in exchange rates is significantly superior to tossing a coin.”

“Currency markets are volatile, and they are affected by economic growth expectations and interest rate differentials,” says Don Lloyd, senior vice president, Capital Markets at Associated Bank. “Today’s big drivers include the fear of a Euro Zone debt crisis evolving into a Euro Zone banking crisis, which, in turn, could easily cause a world recession. Sluggish U.S. growth and Euro Zone concerns continue to drive an accommodative stance in U.S. interest by the Federal Reserve. But U.S. interest rates are only one side of the equation. The other side is the interest rates affecting the other countries that you’re dealing in.”

Smart Business spoke with Lloyd about how to take advantage of hedging strategies to protect your money overseas.

Where are businesses facing the most volatility with regard to currency markets?

Given the recent issues of the European debt crisis occupying the media, one immediately is drawn to the 17 member countries within the Euro Zone. The stronger Euro Zone partners, Germany and France, face leading the charge of recapitalizing the banking system of weaker member countries.  However, with inflation in Germany hovering just above target levels, interest rates remain firm compared to those of the U.S. Likewise, concerns over the sustainable, consistent growth of China add uncertainly to an already fragile global economy.  These two core economic drivers have created uncertainty and nervousness within the foreign exchange markets. U.S. growth seems to be dependent on the future of both Europe and China.

How can companies doing business overseas reduce volatility in their income statements?

Organizations can reduce volatility and more accurately forecast cash flows by using tools to hedge their foreign exchange risks. Some people mistakenly associate hedging with speculation and think they’ll be taking on more risk, but hedging limits your risk.

There are three categories of hedges. First, the forward outright purchase or sale allows you to lock in a rate today to be used at some time in the future. Money doesn’t change hands until settlement day, and you lock in your profit margin on goods you are selling.

The value of this hedge is the certainty it provides. Some companies use this hedge, and then, if currency rates have moved in their favor before the transaction settles, are not happy because they would have come out ahead had they done nothing. Right idea, wrong product. What those businesses want is another type of hedge, an option.

Options use a strategy similar to options on interest-rate swaps. They allow you to protect against the downside and, in some cases, benefit from the upside. You lock in the right, but not the obligation, to sell at a specified price. You pay an up-front premium for an option, with the amount dependent on the strike price you choose. You get 100 percent protection from adverse exchange rate movements but dollar-for-dollar gain if the currency moves in your favor.

However, some companies don’t want to pay a premium up front because of cash flow issues. In that case, you may want to consider a structured option, which allows you to put two or more options together to reduce or eliminate the premium. Start by buying a regular option, which costs some premium, but to reduce this cost, you also sell an option to your FX provider. You earn premium for the option you sell, which reduces or eliminates your overall cost of the structured option. You will be fully protected if the currency moves against you, but you limit the benefit if it moves in your favor. By limiting your dollar-for-dollar benefit, your premium is reduced.

What kinds of companies should consider a hedging strategy?

Five types should consider hedging. First is any company that buys and/or sells goods overseas; any company that makes or receives payments in more than one currency could potentially benefit from hedging.

Overseas subsidiaries of companies based in the U.S. also should consider hedging, as they face two kinds of foreign exchange risks. First is transactional risk, which applies to accounts payable and receivable. Any time money trades hands and two currencies are involved, there’s a risk that could be mitigated with a hedging strategy. The second is translational risk, which applies to your balance sheet. For example, say a company buys or builds a plant overseas and pays for it in foreign currency. At the end of each year, it has to put a value on the plant in U.S. dollars for the balance sheet. It might lose equity because of changes in the exchange rate but could hedge this risk. Some companies may decide not to hedge because they plan to operate in the foreign country forever, in which case the exchange rate may not matter. But sometimes, years later, the company closes the foreign plant and takes a large loss because the exchange rate has changed and it did not hedge the exposure.

Another type of organization that should consider hedging is local subsidiaries of foreign-owned companies. Sometimes the foreign exchange risk is handled by the parent company, but others prefer to have each subsidiary handle its own. Firms that send payroll overseas may also benefit from hedging. If a company has to meet payroll in a foreign currency, there’s an exchange rate risk that can be hedged. Finally, anyone who invests overseas, such as fund managers, foundations and pension funds may want to consider hedging, as this is by far the largest segment of the foreign exchange market.

Associated Bank, N.A. is a Member FDIC and Associated Banc-Corp. Equal Opportunity Lender.

Donald Lloyd is senior vice president, Capital Markets at Associated Bank. Reach him at

Published in Chicago

Just when many investors were expecting the market to return to a steady growth cycle, they were caught off guard by an unexpected leap in market volatility, accompanied by a substantial decline in interest rates.

The dramatic swings in the marketplace seen over the last few months have been fueled by a variety of factors. The political system has been in turmoil as differing factions in Congress and the White House have gone toe to toe on whether to raise the debt ceiling. And, the recent first-ever downgrade of the United States government debt rating resulted in even more uncertainty for investors, says Thomas Schuller, CFP®, a vice president and financial consultant at Associated Investment Services Inc. Add to the mix a fear of defaults in Europe and a continued soft domestic economy with sustained unemployment numbers still near double digits, and investors seem to be running for the exits.

“In these difficult economic times, investors are looking for an opportunity to reduce market volatility and increase the yield of their individual portfolios,” says Schuller. “Market-linked CDs can be the answer to those concerns.”

Smart Business spoke with Schuller about how to determine if market-linked CDs are the right investment vehicle to help meet your financial goals.

What are market-linked CDs?

Market-linked CDs can offer a solution to help investors overcome the unexpected financial and investing hurdles they may currently face. The core characteristic of this unique solution is that it provides clients with a balance between risk and return.

These investments offer a guaranteed return of principal if held to maturity, and the potential for an attractive return above that of traditional CDs and fixed income products. The return is linked to the average performance from a basket of individual common stocks, subject to a capped maximum return.

Market-linked CD products have been experiencing a surge in demand across the country. Historically, investors have been advised to shift their allocation between stocks and bonds to find the proper asset mix. The typical investment advice is to increase bond exposure to reduce risk and increase the equity exposure to increase potential return. Adding a market-linked CD can help resolve these issues.

However, many clients feel like there is no safe place to turn. Current interest rate levels are not high enough to meet their goals, but the alternative of experiencing the value swings of the stock market is equally unappealing.

How do market-linked CDs work?

All bank-issued certificates of deposits provide clients with FDIC insurance and a guaranteed return of principal, if held to maturity. Market-linked CDs enjoy these same principal protection and FDIC insurance features. However, rates of return for market-linked CDs are linked to the average performance of an equity index, or a basket of individual stocks, subject to a capped maximum return.

For example, Associated Bank’s Power CDSM links its interest rate to the average performance of a basket of 10 individual common stocks that include recognizable companies such as 3M, Apple, DuPont, Kraft and Cisco. Market-linked CD offerings are priced monthly, with the capped maximum return finalized on each monthly issue date.

There is a risk that if the underlying basket of stocks does not generate a positive return, based on the conditions of each offering, that the client will receive a zero percent return, but the principal is always guaranteed if held to maturity. Market-linked CDs typically have a maturity range of five to six years.

It is important to also note that market-linked CDs typically have established minimum purchase levels that begin at $5,000 or even $10,000. And as with any investment, clients should always carefully read the term sheet and disclosure before determining whether this is the right product for their needs.

How can someone determine if this is the right solution for their investment needs?

If you are seeking a new solution to help provide a balance between risk and return, market-linked CDs may be an attractive addition to your portfolio. However, they do carry certain risks and may not be appropriate for those who do not have a long-term investment horizon, or for those who need guaranteed income to meet daily living expenses.

A specialist will be able to help you determine if this is the right investment vehicle for you needs.

The Associated Bank Power CD is issued by Associated Bank, N.A. (“AB”), Member FDIC, and is offered through Associated Investment Services, Inc. (“AIS”), Member FINRA and SIPC, d/b/a Associated Investment Services Group in Minnesota. AIS services the brokerage account in which your Associated Bank Power CD investment is held. These products may incur a significant loss of principal if sold or redeemed prior to maturity. AB and AIS are affiliates of Associated Banc-Corp.

Please see term sheet and disclosure for complete details prior to any purchase. This product involves a number of risks and may not be suitable for all clients. If you redeem the Power CD before maturity, you may lose principal. Contact your Associated Investment Services Inc. representative for more information, the current term sheet and disclosures.

Thomas Schuller, CFP® is a vice president and financial consultant with Associated Investment Services Inc. Reach him at (312) 565-4150 or

Published in Chicago

As a business owner or executive, you know that it’s important to protect your organization from fraud loss risk. However, you may be less aware of the need to protect your individual risks, including personal identity theft.

“Identity thieves use your personal information to commit financial fraud, such as accessing your existing accounts and opening new ones, and sometimes even renting apartments or obtaining health care services in your name,” says Donna Petz, senior vice president, director of Bank Insurance and Compliance at Associated Bank.

Smart Business spoke with Petz about how to protect your personal information.

Why should business owners be concerned about identity theft?

According to a report by Javelin Strategy & Research, 8.1 million U.S. adults were victims of identity fraud in 2010. One of the major contributing factors is that there is so much personal data being collected, even by services that are unrelated to your finances. For example, when you apply for cable service, the company may ask you for your Social Security number. Then, not only is the primary service provider storing the information, it is often disclosing it to third parties that may be supplying services to your provider.

As a result, it’s difficult to know where your personal data reside, whether they have been sold or traded — legally or illegally — and what kinds of compromising situations you may be exposed to.

How can social media sites prove a risk to personal data?

Social networking sites are, by nature, open. People post their full names, where they live and work, where they were born and dates of birth. And that information can be extremely valuable to a potential identity thief.

Understand the privacy settings on social networking sites and be aware of what family and friends may be posting about you on their pages. Once private information about you is out on the Internet, it is impossible to retrieve it.

How can you reduce the risk of identity theft?

Be vigilant about protecting your financial information and monitoring your accounts, because identity theft often occurs weeks or months before the victim becomes aware of it. For example, you may not know someone has opened new accounts in your name until you apply for credit and are denied. Or suspicious charges may show up on your accounts. There can be a significant amount of financial damage done between when your data is breached and when you discover it.

What other steps can you take?

  • Be careful who you are dealing with and disclose only necessary information. If someone asks for your Social Security number, ask why and whether there is an alternative method of identification.
  • Never respond to unsolicited requests for personal financial information. Your bank will never contact you to request your Social Security number, account number or password.
  • Monitor financial accounts and use electronic statements to reduce the risk of mail theft.
  • Use strong passwords and don’t store them on or near your computer.
  • Shred documents that contain sensitive information.
  • Don’t carry your Social Security number with you, and don’t write your PIN on your debit card.
  • Request your free annual credit report at, and monitor it.
  • Consider using a third-party service to monitor your financial footprint. Find a service that continually monitors the credit reporting bureaus and public records data and also checks for underground activities, such as when personal information is being bought, traded or sold through covert channels. Such services should also include daily credit monitoring, credit/debit card and Social Security number Internet fraud monitoring and identity theft insurance.

How can smart phones pose identity theft risks?

Mobile phone technology has advanced at a rapid pace. People rely on them for constant contact with their businesses and families, schedules, tasks contacts and e-mail. And the device may contain as much personal information as your laptop or desktop but lack the security controls that computers offer.

Lock the screen with a password, avoid storing sensitive information in an easily readable form, use the phone’s security settings and encryption capabilities, and treat the phone as you would any personal information. Also, take advantage of applications that allow you to lock down a lost or stolen phone so that it can’t be used and data on the phone cannot be accessed.

What if, despite all these precautions, you become a victim of identity theft?

If you become a victim, or suspect you’ve become a victim, the first step is to notify your creditors and financial institutions, both by phone and in writing, that your accounts have been used without your permission. Request new credit cards and account numbers for accounts that may have been breached.

Second, notify the police and provide documentation. Also notify the Federal Trade Commission at and contact the fraud units of the three credit reporting agencies: TransUnion Credit Services,; Equifax Credit Services,; and Experian Credit Services,

Your first line of defense is to prevent identity theft by securing and monitoring your personal information. But if you suspect identity theft, report it immediately. The sooner accounts can be closed and fraud alerts posted, the quicker the issue can be resolved.

Deposit and loan products are offered by Associated Bank, N.A., Member FDIC and Associated Banc-Corp. Loans subject to credit approval. Equal Opportunity Lender.

Donna Petz is senior vice president, director of Bank Insurance and Compliance at Associated Financial Group. Reach her at (312) 861-5306 or

Published in Chicago

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

Published in Chicago

Most business-to-business payments continue to be made by check, but electronic forms of payment such as ACH and cards are gaining ground. That trend will continue, as companies convert the majority of their business-to-business payments to major suppliers from checks to electronic payments over the next three years, says Jennifer Hall, treasury management services representative at Associated Bank.

“Although electronic payments may not fit every business need, they are becoming more attainable for companies of every size,” says Hall.

Smart Business spoke with Hall about how to move your business away from paper payments, thereby having more control over your cash flow.

What are the obstacles to moving to electronic payments?

A company’s ability to move to an electronic payment environment depends on many factors, including the potential financial impact, the type of industry, a willingness to change and an aptitude in working with automated systems. One challenge is simply that payments are made in multiple ways. Some businesses receive payments in four or five different formats — credit cards, electronic payments, checks sent to the office or checks to a lockbox, etc. When evaluating payment options, the challenge is to use the method that works best for you and your trading partner, keeping in mind the need to include required remittance information.

What are the benefits of electronic payments?

There is great value in moving away from paper-based payment processing, but the timing has to be right for your business. There are three main benefits to electronic payments over paper. Costs are reduced as the result of a reduction in the need for check stock, postage and manual labor; certainty of cash flow (due to the elimination of  guesswork); and the minimization of fraud risk. Every time a company mails a check, it risks its account information falling into the wrong hands.

According to The Accounts Payable Network, a group of more than 3,000 accounting, finance and AP professionals, in response to, ‘What is your cost to issue a check?’ answers ranged from six cents to more than $100. This fluctuation is why more companies continue to shift payments to ACH, purchasing cards and repetitive wires. Every step of a manual process contributes to higher costs, from the receipt of paper invoices to keying in invoice data, issuing paper checks, postage, taking phone calls from suppliers and missed opportunities for early pay discounts.

Are electronic payments catching on?

While electronic invoicing may be a far-off goal for some, electronic payments are here for good. Their popularity will continue to increase in business-to-business transactions as check volumes steadily decline, because electronic payments are efficient and the best way to more precisely target a business’s cash. The days of counting on float in check disbursements are winding down, with faster movement of electronic images in the banking system. Additionally, pinpointing the days you want to receive and disburse money can help you streamline cash forecasting.

How can automation with lockbox help streamline the payment process?

Lockbox is a timesaving solution, automating the processing of check payments. Checks  are sent with remittance information to a post office box owned by your bank. The bank opens the mail, sorts and images it, so that customers have access to images of both the check and the invoice. Deposits are made the same day, which improves cash flow and eliminates the time staff spends sorting through mail and making deposits manually.

This process can be further automated by having the lockbox area data enter pertinent remittance information. This is tied to the corresponding check, formatted into a data file and available for upload into your AR system, automating your cash application processes.

Generally, companies experience an 80 to 95 percent hit rate, allowing redeployment of AR staff to more value-added tasks. Banks can even merge various payment types into one data transmission, providing a single file however payment was made.

In addition, lockbox reduces paper filing and storage. Instead of receiving paper, a business receives an electronic file for uploading into its accounts receivables records. Access to electronic images of checks and invoices eliminates the need to take up space storing paper copies.

How do the majority of U.S. companies process payments?

According to the 2009 electronic payments survey from the Association for Financial Professionals, for payments to major suppliers, the typical company makes an estimated 48 percent of its payments by check, 22 percent by ACH credit, 5 percent by wire transfer and the remainder as ACH debit or credit card payment. Going forward, 48 percent of respondents expected that their organization is very likely to convert the majority of its business-to-business payments to major suppliers from checks to electronic payments in the next several years.

Will checks continue to be a part of business-to-business transactions?

Checks are still a very big part of business-to-business transactions. When making the transition to electronic payment processing, start slowly. Evaluate the best way to initiate the payment, then decide how to send remittance information. Before taking action, there are important conversations to have with your vendors, customers and your bank. Developing automated processes can strengthen relationships with key suppliers while improving the speed and accuracy with which invoices and payments are processed. <<

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

Published in Chicago

If one of your key employees suffered a disability or died suddenly, what would it mean for your business?

A death or disability can signal disaster for many companies, especially if there has been no planning. This is especially true for smaller businesses that don’t have a large pool of employees from which to name a successor.

But organizations can protect themselves from the economic losses that could result from such an event through the purchase of key person life or disability insurance, says John Woloschek, vice president, director of advanced insurance planning at Associated Financial Group.

“Most business owners are aware of the need to insure their businesses against losses due to fire, theft, product liability and other legal perils,” says Woloschek. “But many fail to think about insuring the asset most critical to their business — their key employees.”

Smart Business spoke with Woloschek about how to use key person insurance to protect your business should a key employee become unavailable due to death or disability.

Why do business owners need to think about key man insurance?

Among privately held businesses, a principal cause of financial failure is the loss of a key employee or substantial owner due to death or disability. A discussion about key person insurance is just an extension of the typical risk planning that companies do.

Who qualifies as a key person at a business?

A key employee is typically a person who has a substantial impact on the financial success of a business. This person is generally responsible for management decisions, is highly paid, has a significant impact on sales or has a special rapport with customers and creditors. A key employee could be an owner, but doesn’t necessarily have to be. A nonowner key employee might be a salesperson who services key accounts, someone with special skills such as an engineer or designer, or someone who owns patents critical to the business. In general, if the loss of a particular employee could potentially jeopardize a company’s future, the purchase of key person insurance should be considered.

How can the loss of a key employee impact a business?

Losing the management skills and experience of a key employee can be devastating, especially to an organization without management depth. In addition, the business could suffer from a disruption in sales or business production, depending on the employee’s talents in these areas.

Clients may delay orders or refrain from doing business with a company altogether until they see how it will respond to the loss of that person, and that drop in business could result in credit difficulties, making it harder to make payments due. As a result, many lenders often require key person insurance on owners as a security precaution, especially in cases in which it has extended loans due to that particular employee’s talents or resources.

Finally, the company could lose money as a result of the expenses associated with hiring and training a replacement for the key employee, which can occur even if the company promotes from within, as capital losses may continue until the replacement becomes familiar with the position.

What should a key person policy cover?

The most common form of key person insurance is life insurance. However, the highest probability for loss of services from a key employee is the employee’s disability. Statistically, a person is seven times more likely to suffer a disability that lasts more than 90 days than they are a death prior to age 65.

Most employers are unaware that they can buy disability insurance as key person coverage. In light of the statistical probabilities, they would be better off owning key person disability than life insurance.

How do you determine the right type and amount of coverage?

Both life and disability insurance pay a benefit to the company when the key employee dies or becomes disabled. The policy is typically owned by the company, which pays the premiums and is the beneficiary. The amount and cost of insurance depends on the situation, age, health and role of the key employee.

Two factors determine an appropriate amount of coverage. First, the company must make an estimate of the financial loss that would result from the loss of a key employee. Second, it must convince a carrier’s underwriter that the amount is appropriate.

There are formulas used by carriers to determine maximum issue limits that take into consideration the compensation paid to a key person, the company’s gross and net income, or fees and royalties. An experienced business insurance broker will help a company evaluate the risks and then help create the submission package to the carrier to justify the coverage applied for.

How can you determine if coverage is right for your company?

Determining whether key person insurance is appropriate for your business can be a difficult decision, but it’s one that every business owner should consider. For business owners or surviving partners, having those insurance dollars available at that critical time may be the only thing that will keep that company alive. Despite the cost, key person insurance is definitely worth considering to help protect your company and ensure it survives the loss of a key employee.

Insurance products are offered by licensed agents of Associated Financial Group, LLC (“AFG”). • Insurance products offered are NOT deposits or obligations of, insured or guaranteed by Associated Banc-Corp (“AB-C”) or any bank or affiliate and are NOT insured by the FDIC or any agency of the United States. • AFG is an affiliate of AB-C.

John Woloschek is vice president, director of advanced insurance planning at Associated Financial Group. Reach him at (312) 861-5306 or

Published in Chicago

When life is busy and business is hectic, you may be tempted to divide and conquer everything, including both your personal finances and your business finances.

While it’s natural to want to compartmentalize these things and deal with each decision as strictly a personal one or strictly a business one, doing so may mean missing those strategic opportunities that require a broader view of your comprehensive financial plan, says Doug Myers, senior vice president, private banking group manager at Associated Bank.

“As a bank works with corporate executives, principals of closely held companies and professional services firms, they often find that comprehensive financial planning is a key element in meeting the financial needs of those companies,” says Myers. “Decisions about risk assessment, retirement planning and distribution, college planning, tax planning and more require an in-depth understanding of both business and personal goals, seen side by side. By identifying the right bank as a partner, your business can take advantage of its expanded financial planning services, enhancing your company’s experience to both recognize and realize its long-term goals and objectives, both from a business and a personal perspective.”

Smart Business spoke with Myers about how to partner with your banker to take a comprehensive look at finances and determine how to best maximize assets.

What should be covered in financial planning?

A comprehensive financial plan includes many elements and may cover any or all of the following services.

? Cash and credit management, which will create a budget, as well as properly structured debt with appropriate rates and terms.

? Investment portfolio management, which includes an assessment of asset correlation, concentration risks, global asset allocation and risk tolerance.

? Insurance analysis, which examines liquidity issues, income and wealth replacement needs, an analysis of survivors’ needs and a total risk assessment.

? Estate planning and wealth conservation, which should include tax and transfer issues.

? Business succession planning, to map out a business exit and/or continuation strategy. And while reviewing your business succession plan as part of your financial plan provides an edge in your strategy, it is not a primary focus of that strategy.

How do you begin planning?

Your private banker will help you define and prioritize your goals. You should work together with your banker as a partner to determine an action plan and to set a reasonable time frame to meet your financial objective. It is important to include not only the accumulation phase of your financial life, but also determine a plan for the preservation, distribution and transfer of your wealth.

How can the expertise of a private banker help with financial planning?

Depending on your needs, your private banker may bring appropriate specialists into the financial planning process, including investment strategists, trust officers, mortgage advisers, risk management and insurance advisers, business banking advisers and private bankers. All of these specialists will work as a team with you and your other trusted advisers, such as your attorney and your CPA.

Your banker has the ability to bring in financial partners who have the expertise to educate you and provide knowledge so that you can see where there may be both potential risks and potential solutions. The communication is a two-way street. And as you continue to learn about your options, your banker will continue to learn about both your personal and business finances.

What are the benefits of comprehensive planning?

A plan provides peace of mind. Often, people put off planning until a specific concern prompts them to seek out financial planning services, such as an upcoming retirement, receiving an inheritance or the sale of a business. Although financial planning is definitely valuable when you are facing a life-changing event, it’s regrettable when people wait for an issue to arise before seeking help. By the time you get to that point, some potential solutions may have already been eliminated because you waited and it’s too late to get started.

It is far better to be proactive. By creating a comprehensive financial plan, you can preserve opportunities for the future.

How often should a plan be revisited?

Financial planning is an ongoing process. As rules and laws are modified, the opportunities and challenges that you face also change. The process should continue throughout your lifetime and on to succeeding generations.

The area of estate planning has seen enormous changes in a short amount of time. In December 2010, legislators passed a law allowing the first $5 million of an individual’s estate — $10 million for couples — to pass to heirs tax-free in 2011 and 2012. In addition, the top estate tax rate was set at 35 percent, down from the 2009 rate of 45 percent and far less than the scheduled 55 percent. Currently, unless Congress takes action, the law will sunset at the end of 2012. As a result, a strong financial plan, coupled with appropriate estate planning, may be critical to navigating the future. The best time to get your plan is today, so don’t waste time in finding an appropriate financial expert to get started.

Financial planning services are offered through Associated Investment Services, Inc. (“AIS”), a registered investment adviser d/b/a Associated Investment Services Group in Minnesota; Associated Trust Company, N.A. (“ATC”); and Associated Bank, N.A. (“AB”). AIS, ATC and AB are affiliates of Associated Banc-Corp.

Terms and conditions may apply to financial planning services. Associated Banc-Corp and affiliates do not give legal, tax or accounting advice; please consult professionals in those fields for information specific to your situation.

Deposit and loan products are offered by Associated Bank, N.A. Member FDIC and AB-C. Equal Opportunity Lender.

Doug Myers is senior vice president, private banking group manager at Associated Bank. Reach him at (312) 565-5261 or

Published in Chicago
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