Advantageous ancillary services Featured

7:00pm EDT November 1, 2005
Your bank is more than a line of credit -- more than lender, a deposit drop spot or a place to cash checks. Banks offer business owners an array of ancillary services. Are you taking advantage of all the extras?

Offerings like lock-box services put cash flow back into your business faster; courier services take the transit time out of weekly transactions. Cash-management consultations provide you with account analyses so your hard-earned money is directed into funds that make even more money and, ultimately, help your business grow.

Lock-box service
If you generate a slew of invoices and notice they're going to a particular zip code, state or region, you will benefit from setting up a lock-box service through your bank.

Rather than directing checks to a street address, return mailings are addressed to a post office box. The bank then picks up checks on a daily basis and deposits them directly into your account.

Lock boxes are helpful invoice trackers, because banks record each deposit and distribute daily transmittals to customers. Business owners can view these transactions online. What's more, the immediacy of daily deposits reduces check float time.

Because banks collect, deposit and record receivables mailed to lock boxes each day, commercial customers get fast access to funds.

Courier service
owners gain a sense of security and satisfaction when they take checks from the office to the bank. But some days, tight schedules require entrusting checks for deposit to a staff member.

Without realizing it, you surrender the safe-and-sound aspect of personal delivery to a game of chance. What if the employee gets into a car accident -- and the check gets lost? What if the dependable staffer opts to stop at the store -- and purposely loses the check in the grocery check-out?

Courier service provides door-to-door service, from your business to the bank, and eliminates the risk and time elements of bank transactions. When you elect courier service, a provider contracted by the bank will arrive at a scheduled time -- daily, weekly or bi-weekly, depending on your depositing frequency.

An on-site log allows you to track the sum turned over to the courier. The courier then delivers checks for deposit to the bank. Should the rare occasion occur when a courier misplaces a transaction, the provider is bonded and insured to take full liability for deposits.

Cash management
Say a company needs to maintain $50,000 in its checking account for payables but its average deposits add up to $100,000.

A common mistake is to allow that additional $50,000 to stay in the account. While large numbers provide security, excess dollars won't multiply if they are not properly invested.

Your bank can perform an account analysis to help you:

  • Determine your average balance

  • Figure the amount you must retain in your account on a daily basis so all checks clear

  • Create an investment plan to divert excess funds into "sweep" accounts that pay more interest

Rather than allowing the excess $50,000 to sit in the checking account, you could apply a sweep feature to your account. At the end of each business day, the bank would transfer all funds exceeding the $50,000 maintenance amount. You could choose to flow it into an investment account or apply it against a line of credit.

Positive pay
High-volume commercial checking customers should consider ways to prevent fraud. One way is by implementing a positive pay feature.

This service permits a business owner to submit a daily record that details checks written, including amount and check number. The bank compares the account owner's record with their own in-clearing file, double-checking all dollar amounts and check numbers.

During this process, the bank can pinpoint duplicate check numbers and incorrect dollar amounts - signs of fraud.

Craig Johnson is president and CEO of Franklin Bank in Southfield, Mich. Reach him at (248) 386-9860.