Finding Solutions for Growing Businesses
FINANCING YOUR BUSINESS
CASH MANAGEMENT SERVICES
You already have a checking account, and you may have one or more investments. Isn't that enough to efficiently manage your cash flow? It may be, but there are other bank services which can uncover "hidden" dollars in your business. These are called cash management services.
DO YOU NEED CASH MANAGEMENT SERVICE?
Cash management services can help you save money by :
- Replacing a service you already pay for with a cheaper alternative, such as having a payroll service, instead of a CPA, prepare payroll checks
- Decreasing internal costs by paying an outside provider less than you pay an employee for the equivalent job
- Freeing your employees to do more productive work, such as collections or sales
You must weigh the cost of these services against the possible savings. Be sure to consider the direct cost of your own time to your business. Even though you are not on an hourly wage, your time is costly as well as valuable. Time spent on payroll or similar activities does not produce cash flow. Therefore, the real cost to your business when you do a non-productive activity is equal to the cash flow you could be generating by doing a productive activity.
PAYROLL SERVICES
You may be able to customize a payroll service to your business needs. Payroll services can provide:
- All payroll bookkeeping
- Paycheck preparation
- Direct deposit of pay
- Other related services
CONCENTRATION ACCOUNTS AND ZERO BALANCE ACCOUNTS
As discussed in the section on checking accounts, you may need more than one checking account. Concentration and zero balance accounts may simplify your bookkeeping.
Using a concentration account, you make all your deposits to one checking account. Zero balance accounts are separate, special purpose accounts, such as payroll, that are maintained without a balance. As checks are paid each day on the zero balance accounts, funds are transferred into each account as necessary. All your funds are in one account and are easy to keep track of. You also have the record keeping advantage of separate special purpose accounts. In addition to normal checking account service charges, you may be charged additional fees for the zero balance and/or concentration accounts.
LOCK BOX
A lock box works in the following ways:
- The bank collects your receivables from a post office box daily and deposits then directly into your checking account
- Information received with the payments (such as coupons or invoices) is forwarded to you
- Special reports, such as photocopies of the checks, may also be available
A lock box gives you immediate credit for your receivables and reduces your paperwork. It is most cost effective when the volume and/or amount of your receivables are high. Prices are customized to your situation.
BALANCE REPORTING SYSTEMS
Using a balance reporting system, you can access your checking account balance by telephone or by using a personal computer. Information available to you may include:
- Account Balance
- Checks cleared
- Deposit made
A balance reporting system is most useful when your checking account balance changes often because of other services you use, such as:
- Lock box
- Automatic payroll debits by a payroll service
- Zero balance accounts
- Electronic merchant bankcard
MONEY TRANSFER SERVICES
It's convenient and simple for you, your suppliers, and your customers to transfer funds electronically to and from accounts at other banks throughout the country. Electronic transfer makes the flow of payables and receivables more efficient. There is normally a fee for this service.
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