As a small business owner, you have a lot on your plate. From managing inventory to hiring, training and retaining staff, and community involvement, we understand that your days are full. Did you know there are ways to save yourself time and stress when it comes to your banking services?
A recent survey* revealed that 46% of business owners use automated banking tools in their day-to-day operations. Not surprisingly, millennials were most receptive to automated banking technology, with nine out of 10 using them at least once per day.
Automated/digital banking does not have to be intimidating. There is a misconception that using automated tools means giving up control. However, once everything is set up, you are in complete control and can change, suspend or cancel transactions at any point. Making regular use of these resources can help save your business time, money and frustration.
Here are some tools that can help streamline your business:
Overdraft protection on your business checking accounts eliminates overdraft fees and returned checks. An automatic transfer from another deposit or loan account occurs to cover the gap if funds in your checking account are short for the day’s transactions. This feature allows payments to go through without the risk of return and saves you from having to manually review the balance and make transfers on a daily basis.
A sweep account automatically transfers excess funds into a different account at the end of each business day. Excess funds are transferred into an open line of credit to reduce interest paid, or into a money market or other deposit account to increase earnings. Since a money market account typically pays higher interest than a business checking account, “sweeping” the excess cash into a money market is an excellent way to make your money work harder for you. The transfer can be set up to occur automatically when you reach a certain high or low level in the checking account.
Utilizing a bill pay program allows you or your accounting department to set up reoccurring payments to specific accounts (i.e., rent payment, utilities, phone, internet). This capability alleviates the time it takes to review bills and make payments to separate vendors each month. An automatic bill payment system can also keep an electronic record of invoices paid, requiring less manual bookkeeping.
Automatic loan payments can also be set up through your financial institution or online banking as a recurring payment. You’ll still receive a loan statement each month, but the payment will be automatically deducted from your account on the day you choose. This efficiency will save you time and potentially money since you won’t have to worry about late fees if you forget to make a payment.
Automated Clearing House (ACH) is an electronic funds transfer system that moves money between bank accounts. You can use ACH for many business tasks, including paying vendors and receiving payments from customers. However, it is especially helpful when it comes to paying employees. While there is a little bit of work on the front end building a template, it becomes effortless to manage on a bi-weekly or monthly basis. Once it’s set up, you’ll only need to make changes when necessary. Using ACH will help you automate your payroll process and alleviate the need to reconcile checks – which means less time signing, tracking, and distributing paper checks.
Positive Pay – ACH and Check
Check fraud and ACH fraud can present challenges for your business. Positive Pay – ACH and Positive Pay – Check are tools used to prevent fraud by adding an extra level of security that monitors money moving out of your bank accounts.
Positive Pay – ACH helps you protect your money by only allowing ACH transactions from businesses you authorize to debit your account. You provide your bank with the authorized business names, as well as the dollar limits for each. If someone who isn’t on the list tries to withdraw funds, they’ll be blocked, and the bank will alert you.
Positive Pay – Check is a check-verification service that is designed to help reduce check fraud for your business. You provide your bank with information about the checks you’ve written. The bank then compares the information you provided, with the physical check that is trying to clear your account. If the information does not match, the bank will flag it for review before the item is paid. Using these tools eliminates the need to review your accounts each day and saves you from having to follow up on fraudulent checks.
Automation makes managing your banking relationship more straightforward and more efficient. Once set-up of any of these tools is complete, automating your banking processes provides you with high security and control over the movement of your money. While some of these services may have a small monthly fee, the value of the time and frustration they will be saving you outweighs the cost.
Your business banker or treasury management team can sit down with you to review your current procedures and make recommendations and answer any questions you may have.
*Bank of America Survey 2018