Treasury management tools streamline cash flow, prevent fraud

Treasury management tools are not just for big businesses. Companies of all sizes can use remote deposit capture, ACH origination and more. These tools are easy to use and also to work with the simplest operational setup that a business might have.

That’s important because banks are encouraging businesses to move away from check writing due to mail delays and the increasing risk of check fraud. In its place are tools that give more control over payments and offer robust fraud prevention.

“Identifying and preventing fraud continues to be a focus for financial institutions and customers, especially with check fraud and cybersecurity attacks,” says First Federal Lakewood chief lending officer Kurt Kappa. “For example, sending out checks in the mail can be unsafe, especially to someone who you may not be familiar with. You’re essentially handing over your bank account information.”
Smart Business spoke with Kappa about treasury management tools and how they save time and mitigate fraud.

What treasury management tools help businesses better manage their cash flows?
Treasury management tools are a great way to minimize daily reconciliation tasks, and they help automate cash flow between operating accounts, savings accounts and lines of credit. There are two main tools worth highlighting.

The first tool is called zero balance accounts. Zero balance accounts are fully automated and are especially beneficial when a business has multiple accounts that it uses for operating transactions, payroll and other miscellaneous pay tables. With a zero balance account, there is a primary account that holds all a company’s funds, and subsidiary accounts that carry a zero balance. For payments, funds are transferred from the primary account to a subsidiary account, which then transfers the payment (to a vendor, for instance). And when the business receives funds, they are sent to a subsidiary account and then immediately transferred to the primary account. These transfers are all done automatically, saving time. And concentrating funds in one account means better account insight and management.

The second tool that can help businesses manage their cash flow is called ACH origination. It electronically issues payments to or from an external account as a same-day transaction. It takes away the guesswork of when a transaction is going to post to another account. ACH also keeps a company’s information protected because it travels through an encrypted system.

In what other ways are these tools beneficial?
One of the more important benefits of treasury management tools is the fraud prevention component. Treasury management tools can be set to recognize abnormal transactions and then alert the business of that problem. But it also alerts the associated bank’s treasury team, which enables the bank to take a proactive approach to managing any transactions that should not be hitting the account.

Treasury management tools also have a reporting mechanism that can be incorporated into QuickBooks®. When transactions have cleared the account, or payments have been stopped or voided in QuickBooks, the treasury management system will also register that change. It’s an efficient way to determine which items marked in QuickBooks are clearing or being rejected. That can be a lifesaver for bookkeepers.

How can businesses determine which products fit them?
A bank’s relationship manager or member of the treasury team can help business owners navigate their options. They can do a deep dive into a business to find pain points and offer products that can help resolve them.

Some business owners often don’t have the staff to maintain robust bookkeeping. These tools streamline the process so business owners have more time to manage their business. They make accounting more efficient and they’re simple enough for anyone to use.

Every business is different, so what works for one business might not work for another. A conversation with a member of a bank’s treasury management team can lead to a recommendation for a product that will make a business owner’s life a lot easier.

Insights Banking is brought to you by First Federal Lakewood

Kurt Kappa

Kurt Kappa

Chief Lending Officer

(216) 529-2998

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