Most businesses use online banking in some capacity, but not all of those are taking advantage of the tools available.

The value of online banking goes deeper than just the convenience of tracking your cash flow. Through online banking, businesses can improve productivity, quicken access to cash, transfer funds between accounts, initiate wire transfers, pay vendors and more, says Roger Schnorr, senior vice president of business banking, Old Second National Bank, Aurora, Ill.

“Online banking makes good fiscal sense to any business as there is less time and effort involved in every transaction,” says Schnorr. “It’s safe and simple; in short, it’s smart money management.”

Smart Business spoke with Schnorr about how businesses can get the most out of online banking tools to save both time and money.

How can a business use remote deposit capture to improve efficiency and cash flow?

Remote deposit gives businesses the ability to deposit checks by using scanning hardware and online scanning banking software. The bank provides the scanner, which is about the size of a typical toaster. The scanner is connected to the office computer.

The business can scan checks at any time and deposit funds into any number of accounts. The scanning device simply reads the check and deposits it into the specified account.

The real benefits of this tool are same-day credit of funds and the time savings that results from depositing checks remotely rather than having to make a trip to the bank. With faster access to funds, a business can use that money to pay down debt or invest it in interest-bearing accounts.

Ultimately, remote capture can enhance cash flow and accelerate the pace that money is deposited into an account, which is a good thing.

What system should a business put in place to maximize online banking?

One system a business may want to include is Bill Pay, where it would be able to pay bills online. Once the payees are set up, it would take very little time to pay bills, which can help the business owner in better time management.

That said, a company can authorize other individuals to use online banking, just as it would authorize people to sign checks. Online account access may be granted to your chief financial officer, treasurer or whoever manages the books.

How can a business owner be sure that its online transactions are protected from fraud?

Banks are heavily invested in security to ensure that all customers are protected from fraud. The company authorizes certain employees to initiate and approve the wire request. The employees are each given a secure token that works in conjunction with their password.

Another added security feature is using dual control, which eliminates one person from being able to send an outgoing wire without another person doing the approval.

Beyond this, there are tools businesses can utilize as checks and balances to prevent fraud, one of which is Positive Pay. Positive Pay is a popular cash management tool that banks provide to prevent check fraud. The customer issues the bank a file with check numbers and dollar amounts for all checks issued. The bank only pays items with serial numbers and dollar amounts matching the company file.

Positive Pay is an additional stop-gap for fraud in addition to a company’s existing measures.

How can a business use online services to wire money quickly and safely?

Here again is where online banking shines as an efficient, effective and secure tool for transferring money. Online wire transfers allow businesses to initiate their own wire transfers without stepping foot into the bank, which is a real convenience.

This service is becoming more popular with businesses of all sizes that need to transfer funds without the need to leave the office. The bank will only accept transactions initiated by employees the company has authorized, so the company can rest assured that the transfer is safe.

How do sweep accounts work with online banking?

The ability to sweep funds between accounts allows the company to best manage its cash. Say the company maintains a noninterest-bearing operating account and a money market account that pays interest.

A balance threshold is determined in advance. Funds that exceed that threshold are then swept into an interest-bearing account.

The sweep account also may be set up to sweep excess funds toward a line of credit. Automated principal paydowns will reduce the company’s interest expense.

All of these features and functions will give the company the freedom to manage its funds more efficiently, with the convenience of banking when and where desired.

Roger Schnorr is senior vice president of business banking for Old Second National Bank in Aurora, Ill. Reach him at rschnorr@oldsecond.com or (630) 844-8557.

Published in Chicago

Just as people need annual check-ups to maintain their physical health, businesses also need check-ups to help maintain their financial health.

Businesses that are dedicated to creating solid business plans with both short- and long-term goals, and that habitually refer to those written documents and measure their success against those goals are better positioned than their competitors to access capital for growth and go after market opportunities, says Stewart Beach, executive vice president, Old Second National Bank, Aurora, Ill.

“With the economic climate in recent years, it’s critical for business owners to constantly evaluate their position in the market, to review goals and objectives, and to determine what action items are necessary to carry out their business plans,” says Beach. “A business’s bank wants to make sure that management is actively leading the business toward success and future growth, making performing regular financial checkups so vital.”

Smart Business spoke with Beach about how to perform a regular review of your business and its performance, and what to consider during these financial checkups.

What metrics should a business focus on when performing financial checkups?

A business plan is a roadmap for an organization’s goals, both short term and long term, and all businesses should have this document in place and on paper. But the plan doesn’t do any good if you simply create it and put it on a shelf; instead, the plan should evolve over time, be edited frequently and revisited regularly so a business can determine whether it is hitting key goals and objectives.

In particular, the budget is a primary checkpoint that should be carefully analyzed on a regular basis. Is the business meeting its projections? If not, why? What factors are causing the business to derail from the plan? While a business plan seems like an inevitable foundation for any business, the fact is that many organizations do not have a formal plan in place.

But every business needs to dedicate the time and resources necessary to assemble those goals, lofty ideas, strategic opportunities and, most important, those numbers into a sturdy, well-crafted business plan, creating a document that will serve as the basis for regular checkups.

What value do these regular checkups have for a business’s relationship with its bank?

While access to capital is better today than it was a couple of years ago, banks still approach business opportunities with cautious optimism, much like any business would consider a deal in these more fragile economic times. Banks want to know that their business clients have a solid plan in place and that they regularly review financials. This is evidence of a strong management team that is actively leading the business and meeting financial targets.

Management that is on top of the budget and on task with achieving business objectives is likely open to growth opportunities, and this is a win-win for banks and the businesses that partner with them.

How does the economy impact the way businesses should evaluate their organizations?

In the current economy, the markets change more rapidly and business cycles move faster than ever before. Businesses might need to go back to the drawing board and review their business plans to ensure that there is enough flexibility to meet changing demands, whether from the customer base, vendors or delivery sources.

The key word is flexibility. Flexibility should be a way of business life today. But an organization can only be flexible when it has a solid anchor, a business plan or similar document that serves as a benchmarking tool. From there, a company can measure and celebrate its successes.

By regularly taking the pulse of the business, management is in a better position to act on market opportunities. For instance, one of the fastest growing segments today is exports. Businesses that produce all products in the United States and have not considered international business might want to investigate how to gain a presence in the export market. Perhaps a company wants to develop an export business to grow its existing domestic revenue. Or a retail organization might begin to explore online sales opportunities to add muscle to its current in-store sales.

The key is to constantly be looking for what’s next, and the businesses that continue to check in with their plan and ensure that the budget is in line, that goals are being met and that key people are in place to help the business grow have a better chance of succeeding when they venture into some of these market opportunities.

A business that is not on top of the budget, receivables, personnel and sales will not be in a position to capture new market opportunities. The economy today demands that businesses run lean, and that means understanding where every dollar is spent. This is why regular financial checkups are crucial to the future of any business.

Stewart Beach is executive vice president of Old Second National Bank in Aurora, Ill. Reach him at sbeach@oldsecond.com or (630) 906-5478.

Published in Chicago