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Posted: March 23, 2009

New women-owned businesses a growing sector

Cash management critical to stay ahead of the curve

Michele Falivene

The number of new women-owned businesses continues to outpace other business sectors. In fact, 10.1 million firms are owned by women – with a 50 percent ownership stake, or more – employing more than 13 million people and generating $1.9 trillion in sales as of 2008, according to the Center for Women’s Business Research. While this data can be considered a bright spot in our struggling economy, it’s important that women business owners know how to optimize cash management to stay ahead of the curve.

Cash management is the heart of any business, so consider the tips below to make sure you are maximizing cash management options from your banker.

Choose a bank that is well suited to your business needs and a banker who understands your business.

  - Banking shouldn’t be a ‘one size fits all’ proposition, and no customer should be considered ‘too small’ to benefit from the latest technology and service options. It’s imperative to review the bank’s products and services on a regular basis because solutions should change as your business needs change.

  - Cash management is generally fee-based, so request an analysis statement or schedule a meeting with your banker to evaluate products, services and related costs.
  - Ask yourself: Are you paying for services that you don’t need? Do you need services that you don’t have? 

  - Don’t forget to shop the earnings credit rate since business accounts are not allowed to earn interest. Talk to your banker to customize your relationship and tap into their efficiencies.

Put functionality at your fingertips.

  - Make sure that your bank accounts are fully accessible and that you have access to your money as needed and in time frames required. Today’s electronic banking features bring together the benefits of efficiency, security and access to real-time information better than ever before.

  – Take advantage of secure online banking features, and efficient processes such as Automated Clearing House and wire transfers. These options are different at every bank and must have integrity of process that ensures safety. Your banker should explain deadlines and requirements up front so that when it comes time to make a request; it can be completed without delay.

Moving and protecting your cash is of utmost importance.

  – Maintaining necessary cash for operations is critical, but are you positioning your deposits carefully? Ask your banker how you can benefit from sweep accounts. As money flows in to your business, how quickly are you depositing those funds? Remote deposit capture has been around for a couple of years but many businesses have been slow to take advantage of its benefits. Making deposits right from your own office is a fairly new concept, and the cost has come down. If your business still accepts checks regularly, remote deposit capture can be a valuable tool that saves money and improves your cash flow.  Some banks don’t require you to purchase the equipment; they simply charge a reasonable monthly fee for the machine and service. Other benefits include extending your business day and retaining the original checks until statements are reconciled.

Avoid shortcuts when it comes to money management and fraud prevention. There are many ways to protect your cash and your business assets. Ask your banker the following:

  - Can you explain how you handle fraud prevention by way of permissions and authorities?
  - Who view, authorize payments and manage the money?
  - How do you implement internal controls and password protection?

Banks that are serious about fraud protection have invested in advanced software and implemented the industry’s best practices. Other banks require you purchase products such as “positive pay” to compare the details of the checks presented to a master file that the business downloads to the bank. Items must match for payment to be made. 

It’s important you know all your options when it comes to managing your business cash. Make sure your banker acts as a partner in your business plan and can provide services to optimize your cash management.

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Michele Falivene is senior vice president of First American State Bank in Greenwood Village.

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