A Primer On Treasury Management Services

As a business owner, your daily treasury responsibilities include optimizing your company's working capital by looking for ways to collect receivables more quickly, manage cash outflows more effectively, and better utilize banking technology to improve your company's performance.

Treasury or cash management services can help you plan, organize, and control your company's cash position while optimizing your borrowings and investment needs. This article may help you better understand treasury management services that are typically used by businesses today.

Treasury management is normally divided into four main areas: Receivables Management, Payables Management, Funds Management, and Information Management.

Receivables Management

Receivables management aids a business' cash flow by collecting and depositing payments more quickly. Common receivables management services include:

ACH Collection - collects electronic payments. ACH collection works best for reoccurring receivables, such as authorized dues, subscriptions, contributions, or insurance premiums. ACH collection services also help multiple location businesses centralize their funds and better monitor all of their accounts.

Lockbox - allows accounts receivables remittances to be mailed directly to a bank for faster deposit, collection, and reporting. The deposits are prepared at the bank as opposed to your place of business, making funds available to the business more quickly. A lockbox can be integrated with a receivables accounting system to automate postings and provide you with all relevant payment details, including check and invoice images.

Merchant Card - enables a business to accept credit, debit, and gift cards, and perform other payment functions, such as check verification, and check conversion to ACH. These services help increase revenues by providing customers with additional payment options that are faster and more efficient. Transactions are processed directly from your business' terminal and are more quickly deposited into the bank. The processing fees are determined based on the type of credit card, dollar amount processed per ticket, and volume of the business.

Remote Deposit Capture - uses a scanner and a PC with Internet access to make deposits from your place of business. Images of checks are captured by the scanner and transmitted directly to your financial institution for deposit. Deposits are posted to your account the same business day, improving your business' cash flow by providing you with faster access to payments.

Payables Management - helps your business manage and process its payments more efficiently. Payables Management offerings include:

Payables Lockbox - processes and tracks incoming invoices without extensive paper handling and data entry by setting up a payables lockbox. Vendor invoices are scanned, coded online, and made available for your bookkeeper or managers to approve using an Internet-based program configured to your needs. Payments are made to vendors by mailed checks or ACH. All payment approvals are recorded to allow for easy auditing and integration with payables accounting systems.

ACH Disbursement - helps make authorized and secure electronic payments, such as payroll, electronic federal and state tax deposits, interest, and dividends. Like ACH collection, ACH disbursement gives your company better centralized control of funds, and is faster and less expensive than conventional check writing or wire transfers.

Funds Management

Invest idle funds in your business account without sacrificing control of your daily cash needs.

Investment Sweeps - transfers money from your business account into a short-term investment account. If the account balance ever falls below a pre-set level, or as funds are needed for your business' expenses, the appropriate amount is transferred from the investment fund back into the business account. Investment sweeps allow you to earn interest on money not immediately needed for compensation, expenses, and payments.

Information Management

Information management services are the foundation of modern business banking. From accounts receivables to investment management, information is critical to managing your business' banking in the 21st century.

Online Business Banking - provides the ability to view your bank accounts in real time from anywhere in the world with Internet access. You can view your balances and account history, initiate ACH and wire payments, transfer money between accounts, view check images, stop payments, send secure email messages to the bank, and download account information. Additional tools are usually available. Online Business Banking makes managing your company's finances easier, faster, more secure, and on your time schedule.

Positive Pay and ACH Positive Pay - helps detect check fraud, Positive Pay verifies each check presented to the bank prior to final payment. The service matches check serial numbers and dollar amounts against the check issue information provided by your company. Any discrepancies are identified as "exceptions" and are provided to you electronically for final payment approval.

Receiving ACH transactions is made secure with ACH Positive Pay, a system that incorporates ACH transaction blocks and filters to verify the legitimacy of electronic transactions posted to your account. ACH Positive Pay protects against fraudulent electronic transactions.

Choose the Right Mix

In today's economy, it is more important than ever that businesses explore ways to reduce inefficiencies, optimize working capital, and protect their bottom lines. Because your business' needs may be different than those of another business, you should always consult with your bank officer before implementing any service. Choosing the right mix of treasury management services can help you maximize your business' profitability and success.