| Cash flow has been called the lifeblood of business | | | | The flip side of collections is disbursements, or how |
| and it's easy to see why. Sure, sales and profits are | | | | you're paying your suppliers and vendors. The goal |
| important, but it's cash that keeps the wheels of your | | | | should be to hang onto your cash as long as possible, |
| company turning. | | | | within your agreed-upon vendor terms. |
| This makes effective cash flow management one of | | | | Banks offer a variety of online payment options |
| the most important tasks for any business owner. | | | | through the Automated Clearing House (ACH) that |
| Understanding the basic concepts of cash flow and | | | | can help you streamline your payables, reduce costs |
| how to use cash management tools offered by | | | | and improve cash management. These include payroll |
| commercial banks can help your business gain a | | | | direct deposit, pre-authorized debits and credits, cash |
| competitive edge. | | | | concentration and electronic tax payments. |
| It Starts With Collections | | | | Going hand-in-hand with disbursements is account |
| Cash management can be divided into three primary | | | | reconciliation. With these services, the bank simplifies |
| components: collections, disbursements and information | | | | the task of reconciling your bank account by providing |
| reporting. For most businesses, better cash | | | | you with electronic check-paid information. You save |
| management starts with more efficient and timely | | | | time and money through streamlined end-of-month |
| collections. | | | | reconciliation and reduced exposure to check fraud. |
| A lockbox is one of the most helpful tools offered by | | | | Positive Pay is a specialized account reconciliation |
| banks to speed up collections and maximize available | | | | service that helps further reduce the risk of check |
| cash. Instead of mailing payments directly to your | | | | fraud. The bank will compare all checks presented for |
| business, clients mail them to a special post office box | | | | payment each day with a check-issued list you send |
| that the bank checks multiple times each day (including | | | | and pay only those that are an exact match with your |
| weekends and holidays). | | | | list. Others are flagged as suspect and reported back |
| Payments are processed around the clock, which | | | | to you so you can decide whether to pay them or not. |
| reduces mail and processing float. Also, image | | | | Timely Information is Key |
| technology improves accuracy and enables better | | | | Cash management is made more difficult for many |
| audit controls. There are two kinds of lockbox | | | | smaller businesses due to a lack of access to timely |
| services: wholesale, which is designed for companies | | | | and accurate account information. Banks offer a |
| that receive a low volume of high-dollar remittances, | | | | variety of online information reporting services that |
| and retail, designed for companies (like utilities) that | | | | provide detailed, up-to-the-minute data that can help |
| receive a high-volume of low-dollar remittances. | | | | you make better financial decisions. This includes prior- |
| Companies that receive a high volume of checks at | | | | and same-day account balances, lockbox detail, |
| the point of sale, like retailers and medical professionals, | | | | account analysis and more. |
| may benefit from Remote Deposit Capture (RDC). | | | | When you know what your cash position is at any |
| With this service, you receive a specially designed | | | | given time, day or night, you can make important cash |
| desktop scanner and software that enable you to | | | | management decisions more easily-decisions like |
| transmit check images to the bank remotely from your | | | | whether to pay down or borrow from a line of credit |
| place of business. You reap the time and cost savings | | | | or move excess funds into short-term investments. |
| of not having to send employees to the bank to make | | | | These kinds of reporting services may also enable |
| deposits, as well as greater accuracy, better float | | | | you to initiate online transactions yourself (such as |
| management and faster access to funds. | | | | ACH, wire transfers and tax payments) and view |
| Disbursement and Reconciliation | | | | check images and deposit tickets online. |