A Business Needs the Right Financial Partner to Manage Cash Flow Effectively

By John F. Goedeke, Jr.

Look for Banks with Full-Service Treasury Management Services

The cash flow cycle is the lifeblood for every business — small, medium or large. The cycle includes how a business collects money, what happens to the cash when it lands in the company bank account and when and how the money is dispersed. Every business wants to collect as quickly and efficiently as possible and disperse as late and efficiently as possible. The goal is to hang onto cash for as long as you can. But how does a business make this happen? The answer is finding the right financial partner to help.

Start by researching banks with full-service Treasury Management programs. You need an experienced team that will work with you to evaluate how you make and receive payments, maximize the interest income on your working capital interest and reduce your organization’s administrative responsibilities. 

Set up meetings with prospective bankers. A good consultative banking conversation will primarily focus on your needs. The banker should ask about your business and specific requirements to move money in and out to run your company. The banker should listen and ask lots of questions before proposing any solutions. There is no single approach that is right for every business.

Ask who will be supporting your banking relationship. The bigger the bank, the more challenging it can be to determine the answer to that question. You will want to look for a bank with a team approach to client service. The more people you know at your bank, the better. Banks that have locally based, dedicated call centers for businesses and treasury management services with highly trained customer service specialists are advantageous for your business.

Check the bank’s security protocols and see if they match your needs to conduct transactions. The reality is every day people and businesses are victimized by fraud. You need to know how to protect yourself and your business. For example, if you plan to write checks, ask the bank about Check Positive Pay and whether it includes payee information. With Check Positive Pay, every time you issue a check, you send a check issue file to the bank, and they match it with their records of issued checks on your account and alert you of any discrepancies.

Never share your online login or password with anyone. Ask your existing or prospective bank about their fraud detection capabilities. Be patient and grateful if your banker calls you to check on the validity of a transaction initiated from your account, as your banker is trying to help protect your account.

With the historic increases in deposit rates this year, businesses are trying to earn interest on their excess cash deposits rather than just leaving them in a checking account which has been the norm for more than ten years due to the low-rate environment. You need to have a conversation with your banker about which investments are best for your business based on your risk tolerance and liquidity needs.

Depending on the current yield curve, you may find a term investment such as a Certificate of Deposit (CD) is your best option, or liquidity needs may require you to consider a money market account. If safety is your top priority, an investment such as an Insured Cash Sweep (ICS) — that provides FDIC insurance above the current coverage limit of $250,000 per tax identification number — may be your preferred choice, with the realization that a lower rate will be offered.

Once you choose a financial partner, make sure you have an annual review where you sit face-to-face and discuss your business needs with your banker. Be open about your challenges and tell the bank what the team can do to serve you better. Be sure to discuss the services you should have in place to help secure your deposits, current fraud trends and new services the bank may have available. This meeting will be beneficial to you and your banker as you share information that will allow you to work more efficiently and effectively together. Last, but not least, this is a good time to discuss growth plans for the coming year along with potential borrowing needs.

Finding the right financial partner is critical to the success of your business. 

As a title company, you’re handling someone else’s money, so immediately sending out wires is critical. With Sandy Spring Bank, it’s nice to set a wire for 9 a.m. and get a call from a client minutes later confirming they’ve received the funds  Angelica Alford, Owner, Alford Title and Consulting, LLC

About John F. Goedeke, Jr.

John F. Goedeke, Jr. is a Division Executive at Sandy Spring Bank responsible for Treasury Management. Sandy Spring Bank serves clients across Greater Baltimore and Greater Washington D.C. He has worked at Sandy Spring Bank for 14 years and prior to that was responsible for Treasury Management, Private Banking and Workplace Banking at Provident Bank of Maryland. John is a past president of the Fuel Fund of Maryland. He currently serves as a board member and Treasurer of Macha (Mid-Atlantic Payments Association) and is also a member of the Federal Reserve 5th District Payments Advisory Council and holds the Certified Treasury Professional (CTP) designation.

Connect: jgoedeke@sandyspringbank.com, call 866.867.1570 or speak to a Sandy Spring Bank title manager.