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Guide

Six Essential Treasury Management Products for Small Businesses

Treasury Management tools are underutilized by Small Businesses. Here are 6 Essential tools for Small Business treasury management.

When they hear the term “treasury management,” small business owners sometimes tune out because they think this only applies to larger companies. But nothing could be further from the truth.
 
In fact, there’s a wide range of treasury management products that can benefit small companies. “Just because a business is small doesn’t mean it can’t benefit from treasury management,” says Cadence Bank Vice President and Treasury Management Officer Mallory Shary.
 
According to Shary, there are at least six treasury management products that are essential for small businesses. They include the following:
 
  1. Automated Clearing House (ACH) — The ACH is a clearing network for electronic payments. Approximately 22 billion ACH transactions are processed annually, totaling nearly $40 trillion. There are four main types of ACH electronic funds transfers: direct deposit, corporate and consumer payments, and tax payments.
     
    “Most small businesses don’t have the manpower that larger companies do so they have to operate more efficiently,” says Shary. “ACH is just a more efficient way of making and receiving payments. It helps companies move away from time-consuming manual processes like writing checks to electronic payments.” For example, it costs an average of $1.22 to process a paper check received for payment, but the same payment can be processed for pennies using the ACH, according to the National Automated Clearing House Association (NACHA).
     
  2. Wire transfers — These are useful when a high-dollar payment must be sent and received on the same day — for example, during a real estate closing.
     Shary notes that many small business owners don’t realize they can initiate wire transfers online instead of having to visit or call the bank. “If a same-day payment is smaller — for instance, under $25,000 — you may be able to make it via Same Day ACH at a lower cost than a wire transfer,” she says.
     
  3. Remote Deposit Capture (RDC) —With this service, you can transmit check images to your bank electronically from the convenience of your office using a specially designed desktop scanner and software. “This could result in checks posting to your account much sooner than if you drive to the bank once or twice a week to make deposits, thus improving your cash flow,” says Shary. It will also save the time employees spend driving to the bank.
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  5. Merchant services — Customers today expect businesses to be able to accept a wide range of different kinds of payments, including credit and debit cards. “If your business doesn’t allow customers to pay with plastic, you could be missing out on a tremendous volume of sales, including online sales,” says Shary.
     
    In addition, more non-retail businesses are now accepting credit and debit cards, including B2B companies and self-employed individuals. “Accepting cards for payment helps these businesses streamline procurement of small-dollar goods and services while offering a value-added convenience to customers,” says Shary. In addition, it will boost cash flow compared to invoicing and waiting 30 to 60 days or longer to receive checks from customers.
     
  6. Positive Pay — According to Shary, this is an essential fraud prevention tool for small businesses. “It’s a simple tool for preventing check fraud which any business that holds balances in its operating account should have in place,” she says. 
     
    Positive Pay will alert you to potentially fraudulent transactions before they can impact your accounts. Your check issued file is provided to the bank via a simple export from your accounting software when check runs are processed. You will then be alerted if any checks try to clear that do not match the file you provided to the bank. When these potentially fraudulent items attempt to clear your account, you then have the option of paying the item or returning it within a designated timeframe. 
     
    “Without Positive Pay, you have to take steps to get your funds back if fraud occurs on your account, but with Positive Pay the risk of fraud is diminished,” says Shary. “It helps you be proactive instead of reactive to fraud.”
     
  7. ACH Positive Pay — This is Positive Pay for electronic funds transfers. ACH Positive Pay uses a similar process as the one described above to help guard against fraud for all ACH debits that post to your accounts. “You can use ACH Positive Pay to manage your vendors through filters or even block them outright,” says Shary.
 
If you have questions about these treasury management products and how your small business could benefit from them, please contact your Cadence Bank Small Business Banker or your local branch.
 
For more information on fraud prevention and protection, visit the Cadence Bank Business Fraud Center.
 
This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.


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