How to manage your company’s finances with treasury management services Featured

3:46pm EDT March 1, 2011
How to manage your company’s finances with treasury management services

Cash flow is the lifeblood of any successful business. So when credit markets tighten and the economy slows to a crawl, executives often spend valuable time monitoring payables and receivables instead of pursuing lucrative business deals. To solve the problem, leaders frequently turn to traditional, yet costly, remedies like upgrading accounting software or prodding customers to hasten the collection process.

Fortunately, it’s possible to improve cash flow by processing rudimentary financial transactions online or outsourcing them to banks. Modernizing the banking process offers executives myriad benefits such as reduced paperwork, improved efficiencies and a real-time opportunity to manage finances.

“Business leaders don’t have to invest in software or rely on the postal service to speed up collections,” says Elaine Jeon, senior vice president and chief operations administrator for Wilshire State Bank. “By leveraging the robust technology of banks, executives will enjoy better cash flow and reduced risk without making additional investments in technology or hiring additional staff.”

Smart Business spoke with Jeon about the advantages of using treasury management services to improve cash flow and manage company finances.

Which treasury management services improve cash flow?

These services enhance a company’s ability to control the flow of cash, and because employees access the system online, they don’t have to visit the branch to make deposits or initiate transactions.

• SpeeDeposit: Deposit checks as soon as they’re received by scanning the items and submitting them electronically. You’ll also get faster access to funds because deposits are accepted and credited until 7 p.m., and there’s no need to safeguard unprocessed deposits or fill out deposit slips.

• Automated Clearing House (ACH) Origination: The check’s never in the mail when you collect receivables and pay vendors electronically. ACH affords companies precise control over the timing of payments and reduces bad debt exposure, allows business owners to forecast cash flow, negotiate and enforce explicit payment terms and even compete for new deals or larger contracts.

• Lockbox Services: Businesses receiving a high volume of checks can leverage the bank’s staff and technology to process payments and, best of all, deposits are credited the same day they’re received.

• Wire Transfer: Initiate wire transfers to domestic and overseas locations without leaving your office. You’ll also enjoy lower fees and a later cut-off time by processing transfers online, and the added convenience may inspire you to enter new markets.

How does online processing lower risk and improve security?

Treasury management allows companies to leverage the bank’s technical infrastructure, IT expertise and network security without purchasing additional software or hardware, because employees access the program through a secure website. The system also accommodates an unlimited number of users, while reducing the risk of embezzlement or fraud, because administrators can establish access and permission levels and segment transactions by size. Creating different access levels allows the accounting staff to enter transactions so managers and executives can review and approve them online. Each user’s identity is verified when they log in and companies can instantly add or delete employees when the need arises. Finally, businesses that issue large numbers of checks, like real estate or escrow companies, often use positive pay services to prevent fraud. With positive pay, the bank verifies each check number and amount against a list supplied by the company to make sure checks haven’t been altered.

Why is the bank’s software superior to in-house programs?

Companies often collect data in several software programs, so executives have to transfer the information onto spreadsheets to obtain a holistic view of the company’s banking transactions and financial information. The bank’s treasury management system consolidates financial data and transactions from multiple accounts and business entities, giving executives and officers a single, real-time view of the entire organization’s finances along with the analytical capabilities of  a Fortune 500 company. And because the program is Web-accessible, executives can monitor cash flow, analyze the company’s daily cash position, identify funds available for investment and improve yields by initiating transfers from anywhere in the world.

How can executives assess the costs and benefits of purchasing these services?

Certainly executives need to consider the cost of treasury management before deciding to purchase the services. But it’s important to note that online processing or outsourcing banking transactions allows companies to reduce or eliminate many direct and indirect costs along with these additional benefits.

• Online transactions are paperless so they increase efficiencies by reducing the need for faxes and e-mails.

• Multi-level security reduces risk without creating costly, redundant processes.

• Banks provide technical support and employee training at no additional charge.

• Transactions are processed by trained, specialized bank personnel who are more efficient than external employees.

• Fewer trips to the branch and streamlined processing lets employees focus on customers and revenue-generating activities.

Above all, treasury management allows executives to prioritize growth and innovation rather than administrative tasks, and that’s important in today’s environment.

Elaine Jeon is senior vice president and chief operations administrator for Wilshire State Bank. Reach her at (213) 427-6580 or