Written by: Jennifer Tomaino, Head of Treasury Services, Union Savings Bank
As small businesses continue to prioritize speed, accuracy and security, improving small business cash flow becomes even more critical. Here is how simple cash flow automation tools like ACH, remote deposit and more can help you keep up with today’s speed of business without missing a beat.
Creating a smooth and efficient purchasing experience for your small business customers begins with optimizing your own cash flow. A common misconception is that a strong month of sales correlates to positive cash flow. But since today’s bills and the past month’s account receivables do not necessarily overlap, this can be a costly mistake that can set you back more than just 30 days. The first step to shortening your cash flow cycle is using Automated Clearing House (ACH) transactions for your business’s payment activity.
ACH collections allow businesses to debit their customers’ accounts for payments owed, providing them with overnight access to their payments and facilitating the payments process for their customers. On the other hand, with ACH payments, small business owners set up or import an electronic file into their online banking system and send payments for overnight delivery to their vendors. Automating small business cash flow with ACH payments does more than save small business owners the time and money they would otherwise spend writing and mailing checks. ACH payments also allow businesses to hold onto their money until the day before it’s due, eliminating the wait of up to a week or longer as checks are mailed.
ACH payments can also add a layer of security for small business owners. The speed and efficiency of ACH payments reduces the chance of fraudulent activity by shortening the cash flow cycle and limiting access to account information. However, unlike consumers who have up to 60 days to return unauthorized debits, businesses have only 24 hours to report discrepancies, so it is still important to monitor your cash flow activity. Cash flow management tools like Positive Pay can help.
When automating small business cash flow, protecting your business from potentially fraudulent activity is critical. Fraud protection options such as Positive Pay from Union Savings Bank can help small businesses rapidly detect potential fraud before it impacts your business. Positive Pay detects unusual or unauthorized disbursement activity, alerts the business owner and gives them the opportunity to return the item before the funds are gone. For example, a filter detects a $500 check being deposited as a $5,000 check, the account owner receives an alert and reviews and returns the check via the online banking system before the item clears.
Another cash flow management tool that can help small businesses automate and speed up their process is remote check deposit. Union Savings Bank’s small business customers who use remote deposit are set up with a scanner, enabling them to deposit checks at their business through the online banking platform. The system adds the amounts automatically and, when run prior to 6:00 pm, the deposits are available the next day. In addition to its speed and convenience, this tool can allow members of your organization to focus less on time consuming tasks and more on constructive efforts such as generating cash flow projections and budgeting.
The payments environment is constantly changing, and in response banks’ product offerings will continue to change. For example, beginning in September 2019, new enhancements to Same Day ACH may enable businesses to send and receive payments earlier in the day. And six months later in March 2020, the per-transaction dollar limit for same day ACH transactions is expected to increase to $100,000. Stay tuned for more information as the rules around payments change, offering banks the opportunity to expand their product lines.
Adding Automated Clearing House payments, remote check deposit and fraud alert tools to improve small business cash flow now can help you take advantage of automation enhancements as they emerge. To learn how cash flow management tools and services from Union Savings Bank can help your small business, contact our Business Banking team.