Cash Flow is King for Business Success

Mike Lucey

What’s the key to having a successful and long-standing business? Does it involve having a revolutionary product or idea? Possessing specialized expertise to offer a needed service? While those things are important, the most critical factor that contributes to business success is how well you manage your cash flow.

— Mike Lucey

Vice President, Commercial Banking
TheBANK of Edwardsville

Yes, cash flow really is king. You can have the most innovative product on the market or be the most experienced service provider in your area, but if you can’t manage the money that flows in and out of your business, your business won’t be successful — or be around for long.

Here are some ways you can manage your cash flow — and your chances of business success.

EXPEDITE RECEIVABLES

The money you make is key to controlling your cash flow, but if that money isn’t collected in a timely manner, you may have trouble meeting your expenses. The most successful business owners understand the importance of expediting receivables and have solutions to encourage prompter payments. They may, for example, offer shorter payment terms — say 30 days versus 60 days. Or, they may institute late fees, or offer discounts to customers who pay early. TheBANK of Edwardsville has several options to help businesses quickly deposit checks and collect payments like:

  • Deposit Scanners: This is the check scanner that sits at your office that allows you to deposit checks from the convenience of your business without having to go to the bank. This accelerates checks that might otherwise sit for a few days before you have time to get to the bank, and to get those funds in the bank as fast as possible to work for you.
  • Accept credit/debit card payments: Another way to encourage payment from your customers is to give them the flexibility to pay with debit or credit cards. If you sell goods and services, you may find that customers actually spend more money when they can pay by card. It is convenient for them and you get your funds the next day.
  • ACH options: Some businesses can offer to directly debit their client’s bank account for their payments due. This eliminates the wait time for checks to come through the mail. You get your money faster, and in the time frame you specify.
  • Lock Box: For clients that have a large amount of items coming through their office, Lock Box allows TheBANK to process those items on your behalf. We provide reports and the ability to review the items on a daily basis so you know exactly what’s coming in. This frees up time for your office staff to do other things. It cuts down on internal fraud by removing the chance of check theft by taking all checks out of the office and giving the responsibility to us.

UNDERSTAND YOUR CASH FLOW

The best way to work on your cash flow is to understand how it varies throughout the year. For example, your business may be more seasonal and you may have periods when your cash flow is tighter. Understanding the nature of your cash flow makes it easier to plan for your business. You need to know on a daily basis what your cash position is. Having the ability through online banking to see what your balances are as well as activity is very important.

MAXIMIZE EXCESS FUNDS

If you have an excess of cash flow, it’s important to put it to work for you by saving or by paying down loans. TheBANK offers Money Market savings accounts, Sweep Checking Accounts and CD’s. We  also participate in the CDARS Program that provides full FDIC insurance. All of these options offer very competitive rates on return.

CREDIT NEEDS

If you have seasonal cash flow, a line of credit from TheBANK will allow you to meet expenses during slower times. With a line of credit, you can borrow and repay funds over and over again, and will pay interest only on the amount you borrow. We also offer term loans for larger purchases like equipment or real estate. By letting TheBANK finance your receivables, inventory, equipment, and real estate, you can keep your cash working for you and not have it all tied up in assets.

EXTEND PAYABLES

Utilize tools to extend your payables, and keep your cash working for you as long as you can. Take advantage of the terms vendors give to you and pay with a credit card to extend them out another 30 days. You will also be able to earn reward points from your credit card.

FRAUD SERVICES

TheBANK offers several services to help prevent fraud at your business to keep your cash from getting in the hands of someone that shouldn’t have it like:

  • Positive Pay: A free service for commercial clients of TheBANK, Positive Pay only clears checks that are on a report you provide to us. This prevents checks that are fraudulently written to be processed through your account.
  • Reverse Positive Pay: We provide you with a list of checks that are being processed and you make the decision as to what gets paid and what is returned.
  • ACH Debit Block: We keep an eye out for ACH transactions that are being debited from your account. We meet and determine, based on what you tell us, which vendors are allowed to pull money out of your account. If a vendor is not on that list. The ACH debit doesn’t happen.
  • ACH Debit And Credit: Utilizing the credit feature allows you to send money without having your check go through the mail along with your account number and signature for someone to steal. Utilizing the debit feature helps in not having your clients’ checking account information floating around the office for others to see.

Cash flow truly is king for a business, and TheBANK’s commercial banking professionals are here to help you successfully manage it. For more information on ways to manage your business cash flow, talk to a commercial banking professional at TheBANK today.

  • Mike Lucey
    • Vice President,

    • Commercial Banking
  • TheBANK of Edwardsville
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