In today’s fast-paced business world, intelligent treasury management is critical to every organization’s success.
So what exactly is treasury management? In the broadest sense, it’s the management of incoming and outgoing funds from an organization. The process of treasury management itself includes planning, organizing, and controlling cash flow to further a business’s objectives — and help it reach its long-term goals. Usually, a company’s treasury department is in charge of these tasks.
A company’s treasury function not only keeps activities such as production and distribution fueled with adequate funds, but also regulates cash flow to maintain the company’s financial stability. This assurance is why treasury management is so important.
The treasury management process varies depending on the nature of a company’s cash flow. For small businesses, cash-flow management can be rather complicated, and no two approaches are alike. On the other hand, larger businesses (such as manufacturers) might make larger purchases and sales less frequently, meaning their treasury management might be more straightforward and process-oriented.
Typically, businesses, organizations, and individuals rely on banks for these treasury management services, and most have a variety of options that fit each client’s specific needs. No matter the industry you’re in, it’s crucial to work with a bank that will help you make the most of its treasury management services.
What Kind of Treasury Management Services Do You Need?
Again, the best local banks offer an array of individualized treasury management products and services. What they won’t offer are one-size-fits-all packages that aren’t uniquely tailored to your needs. To ensure their treasury management services are efficient, personalized, and easy to use, they’ll listen to your concerns and will try to learn the ins and outs of your business.
At American Bank of Missouri, for instance, we provide a range of treasury management services suitable for businesses across different industries. Our offerings include:
Business Online Banking
Your primary business account is the heart of your treasury management operations. That’s why our Business Online Banking service allows 24/7 access to your account balance and instant transfers between accounts. It’s a secure, fast, and easy way to make loan payments, view checks and deposits, download statements, and access real-time reports. When combined with our bill paying features, you’ll have the core services to address the treasury functions in your company.
Business Bill Pay
Business Bill Pay allows you to view all outgoing payments in one place and schedule one-time or recurring payments in advance. Maintaining robust relationships with your suppliers and service providers is critical, so we automatically send confirmation numbers to you after every payment. You’ll never have to wonder whether affiliates received their funds.
Remote Deposit Capture
One of the most useful features your treasury management system can have is the ability to remotely deposit checks with a scanner or mobile device. When you scan an image of a check through our secure portal, the deposit posts to your account quickly and automatically.
Automated Clearing House (ACH) Origination
ACH origination is one of our most popular treasury management services. With ACH transactions, your customized treasury management system will initiate direct deposits and payments from any bank account in the United States.
With our lockbox services, your affiliates can mail payments to a secure central location. We collect payments from these locations daily and process them immediately, which helps funnel payments into your treasury management system faster.
By working with American Bank of Missouri, you’re able to send and receive wire transfers whenever needed. Your various partners and affiliates might have different payment preferences, so it’s ideal to have a degree of flexibility in your treasury management operations.
Most banks’ Treasury Management Departments offer positive pay, an automated fraud-notification system that compares the check number, payee, date and check amount against a list of checks that the company has authorized and issued.
Business Mobile Banking and Deposit
All of the features of our Business Online Banking are also available on mobile. For those times when you’re away from your office but can’t stop at the branch, our secure mobile banking and deposit allow you to take care of your business’s cash flow management wherever you might be.
These are all great examples of treasury management services. They show you what’s possible, but your business might not require all these solutions. To get a rough idea of your needs, it’s best to first determine how much cash flow you’ll manage.
Industries with higher cash flow (such as the service and technology sectors) often have lower operating expenses and less outgoing revenue. These kinds of businesses don’t require the same cash flow management tools as ones with lower cash flow, which tend to have longer incoming payment cycles. For example, the oil and gas industry must wait an average of 110 days to receive payments due, meaning managing outgoing funds requires greater scrutiny.
If you aren’t certain about the treasury management solutions you’ll require, start by connecting with a trusted bank. A trained treasury management representative can help gauge your needs and single out the best options for your business.
How Different Businesses Manage Cash Flow
At American Bank of Missouri, we understand the nuances of small business’s cash flow management and take it seriously: Studies demonstrate that most businesses fail due to cash flow issues alone, and these financial problems often stem from simple errors and mismanagement.
Let’s say you’re a logistics company facing a treasury management problem: One of your business partners isn’t endorsing checks when making remote deposits. Due to this, the deposits won’t post to your account, and the disruption in your cash flow timeline leads to frequent headaches.
Luckily, you have a great treasury management partner that quickly identifies the issue. In this case, your partner’s bank doesn’t educate its clients on how to use the deposit function properly. To fix the issue, your bank suggests electronic-only deposits, as it would eliminate human error.
Because this issue could’ve caused problems in other areas of your business, it’s a good example of how cash flow problems can eventually lead to a business’s failure.
Again, most banks offer treasury management services, but a lot can go wrong without individual attention and guidance from a trusted banking partner. The best banks will not only put secure treasury management services and products at your disposal, but will also show you how best to use them to ensure maximum convenience and minimal error.
This is especially important to cash flow management in, say, healthcare and medical businesses, where the timelines and needs can vary from month to month. The medical industry is a unique one, and robust treasury management requires awareness of the various factors influencing cash flow.
There’s the percentage of time doctors are booked, for example. The procedures they perform and what patients will pay during visits should also be considered. And then, there’s the matter of when insurance companies will make payments — if they pay at all. If they don’t receive payments due, that’s yet another cash flow consideration.
Complicated businesses can take certain steps to streamline their treasury management, but teaming up with banks that understand the unique nuances of cash flow in their industries (in the above case, the medical industry) can reduce reliance on outside financing. This saves money on interest costs and allows them to retain more funds for reinvestment and emergencies
Best Practices for Cash Management
There’s no standard system for a business’s cash flow management, and the department that takes care of financials varies from company to company.
Knowledge can vary, too: At American Bank of Missouri, we work with treasury managers who are very knowledgeable about the treasury management services and products they need. On the other hand, we have clients with little to no knowledge of how to manage their business’s cash flow. If you’re in the latter category, we’re happy to provide guidance.
First, we’ll talk to you about how you manage payables and receivables. That gives us an idea of which treasury management services will most benefit you. Then, we can show you how that recommended suite of services can save you money on internal costs and labor.
Your small business’s treasury management duties might be allocated to you, a spouse, or an assistant, but larger corporations will have a controller, an accountant, or a bookkeeper watching over cash flow. It all depends on how much control you want. For instance, some business owners and senior-level employees often don’t look at accounts or log into their business’s online banking. Others set up dual controls so they can view every transaction.
Because the style of cash management varies from company to company, knowing how well your system functions means learning about the treasury management services your bank provides. Consider the following questions:
This isn’t an exhaustive list, but it’ll give you a good indication of how effective your bank is.
Additionally, the answers to these questions might change over time as your business evolves and your cash flow management needs change. A company with, say, five employees can log in to online banking and use an ACH transfer service to complete direct deposit payroll. When that business grows to 20 or 30 employees, however, it will likely need to hire a payroll company.
Another consideration is a growing company’s rising transaction volume, which might require a different type of account. If you suddenly need to deposit multiple checks daily instead of once a week, you’ll likely need a check scanner at your office (or a lockbox if the check volume is high enough).
These solutions save time and are convenient, but they also add cost. If freeing up your employees’ time is more important, however, talking to your bank about time-saving solutions is a good idea. Besides this, many businesses find that sourcing certain treasury management services to digital and automated channels is not only worth the investment, but also necessary. In a recent survey, nearly half of business owners said they expect to increase their use of ACH direct deposit via online banking in the next year.
A treasury management expert will know which solutions to implement to help you invest in other areas of your business or offset fees, all while keeping your system effective. However, your priorities might shift regarding convenience, efficiency, and saving on internal costs, so the best banking partners check in periodically to see whether you’re still satisfied with your treasury management setup.
American Bank of Missouri’s Approach to Treasury Management
Effective treasury management offers many advantages, but it also takes a personal, relationship-based approach. Unfortunately, not all banks operate with this goal in mind: A J.D. Power survey found that just 37% of small business banking clients believe their bank “appreciates their business,” and under a third say their bank truly understands what they do.
At American Bank of Missouri, we take a decidedly different approach to the treasury management process. First, we listen to your business’s story, your overarching goals, and the areas of the business that you’re most passionate about. We then explore your cash management process, delve into the specifics of payables and receivables, and pinpoint the treasury management services that would be most beneficial to your business.
We tend to ask about current frustrations, what’s eating up your time, and what you’d like to streamline. We understand that your business’s cash flow management might not be an exciting task for you, so our goal is to help you find the most seamless solution.
We also believe that relationship-based customer service is paramount to effective treasury management. We have a compact, dedicated team that handles your treasury management accounts, so you’ll receive a quick response whenever you have concerns about your cash flow. Because we’re a local bank, we also have more flexibility when it comes to customizing solutions and offering competitive pricing.
If you’re considering our services, you may wonder whether you’re following treasury management best practices or whether your current treasury management system delivers significant value. We advise potential clients to ask themselves this simple question: Does your current treasury management system save you time and money? After all, your focus is on running a cost-effective business, and your bank should make that easier for you.
Adding convenience and security to your small business’s cash flow management is another benefit of robust treasury management services and products. That means American Bank of Missouri affords clients access to technology solutions that make their work easier — such as fully secure online and mobile banking — as well as the support needed to quickly resolve financial issues.
Overall, a reliable, stable, and accountable treasury management provider helps you minimize risk and maximize your company’s growth potential. Having a personal relationship with a knowledgeable bank goes a long way here. If you’re ready to streamline your business’s treasury management processes, come talk with the dedicated team at American Bank of Missouri. We’re prepared to explore your current workflows and provide solutions.
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