5 Treasury Management Services Community Banks Need to Have

Offering treasury management services can deepen a community bank’s relationships with business customers, increasing retention and boosting the bottom line. These services can help businesses solve many financial and operational problems and challenges.

Here are five of the most popular treasury management services and how they can help community banks alleviate their commercial customers’ business pain points.

1. Online banking for real-time cash flow management

According to Laura Nix, senior vice president and treasury management director at $3.3 billion-asset First Community Bank in Batesville, Arkansas, improving cash flow is a big challenge for most of the bank’s business customers. 

“They need access to timely information to make informed financial decisions that enhance cash flow,” she says.

Online banking gives businesses access to real-time information about transactions that occur throughout the day, such as wire transfers, Automated Clearing House (ACH) debits and credits, and transactions completed at the teller line. 

“Armed with this information, the business might not have to draw against its line of credit, which saves interest expense,” says Nix.

2. Remote deposit capture to accelerate cash flow

Taylor Gibeau, assistant vice president and treasury management officer at $1 billion-asset Adams Community Bank in Adams, Massachusetts, also views cash management as a primary business pain point. 

“Businesses of all sizes are looking to improve their cash flow and working capital cycle to effectively run their day-to-day operations,” Gibeau says. “By utilizing remote deposit capture, businesses can speed up the movement and availability of their cash.”

With remote deposit capture, businesses can deposit checks right from their office and receive next-day funds availability. “Also,” says Nix, “businesses don’t have to send an employee to the bank to make deposits, which saves time and improves productivity.” 

3. ACH payments to improve working capital

ACH debits and credits are another effective treasury management tool that can improve cash flow. 

“By initiating ACH credits instead of sending checks, businesses can delay making vendor payments as long as possible,” says Nix. 

With ACH debits, businesses can draft customers’ accounts on the payment due date instead of waiting for them to send checks. 

“When used together, ACH credits and debits can improve cash flow by shortening the working capital cycle,” says Gibeau. 

4. Sweep accounts to maximize excess cash

Many businesses fail to take advantage of opportunities to earn interest on excess funds because they don’t have the staff to transfer excess cash into and out of interest-bearing accounts. Sweep accounts solve this problem by automatically “sweeping” excess business checking account funds into interest-bearing accounts, including overnight investments.

Here’s how it works: Businesses set a target checking account balance that’s high enough to meet daily working capital needs. Any balances over this amount are automatically swept into short-term investment vehicles, such as money market accounts, at the end of each business day. 

“This keeps a company’s business finances working smarter,” says Gibeau.

5. Positive Pay for check and ACH fraud prevention 

Businesses today face continuous challenges when it comes to safeguarding their financial accounts against ever-changing fraud and cybersecurity threats. Positive Pay is one of the most effective treasury management tools for thwarting check and ACH fraud. 

“Any business that’s writing at least 50 checks per month should be using Positive Pay,” says Nix. Gibeau agrees, calling Positive Pay “a powerful fraud prevention solution designed to help businesses detect and stop check and ACH fraud before it impacts their accounts. 

“Positive Pay reduces the risk of financial loss, enhances internal controls and confidently protects business’ financial reputations,” she says.

With check Positive Pay, the bank compares checks presented for payment with a check-issued file provided by the business. Any items presented that aren’t on the file are marked as exceptions and presented to the business for a “pay” or “no‑pay” decision. 

“If Positive Pay catches even one fraudulent check, this can easily save the business more money than the cost of the service,” says Gibeau.

According to Nix, ACH Positive Pay works a little differently. 

“The customer gives us a list of businesses that are allowed to debit its bank account,” Nix says. “If an ACH debit hits from a business that’s not on the list, it’s presented to the customer as an exception. Customers can also set limits for how much certain businesses can debit from their accounts.”

How treasury management boosts operational efficiency and security

Gibeau says treasury management is all about bringing efficiencies to business operations while enhancing security and improving cash flow. 

“Treasury management solutions also free up the owner to focus on areas that add value to the business, which is invaluable,” she says. 

Importantly, treasury management solutions aren’t one-size-fits-all. 

“They are tailored to each business’ unique needs, whether it’s a small mom-and-pop or a larger commercial client,” says Gibeau. “Our treasury management department partners with other areas of the bank to offer customers a holistic solution, so treasury management services are intertwined with their deposit and lending needs.”

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