It’s summer in Maine, and for a lot of businesses around the state that means it’s the busiest time of year. If you run a seasonal business, or even one that sees a significant increase in business during the warmer months, your finances will likely look a lot different in the months ahead than they do mid-winter. For businesses that will be managing an increased flow of cash, checks, and other payments, now is the time to set up systems that will ensure your funds are working hard for you during your busy season.

Earn interest on surplus deposits

If you’re in the hospitality industry, you might be taking deposits now for upcoming reservations over the summer months. This means you probably have more cash on hand, but if it’s sitting in a checking account, you’re missing an opportunity to make the most of those funds. Money in checking accounts doesn’t earn interest, but your business might benefit from setting up a sweep account that can leverage any surplus cash as it comes in.

A sweep account links your bank account to a fully FDIC insured interest bearing account and is set to automatically transfer funds between the two when you hit a specified threshold. You can establish the amount of cash reserves that you’d like to have in your bank account at all times to cover business expenses, and when your account exceeds that threshold, any excess funds will automatically be transferred to your interest-bearing account where your money will begin working for you earning interest.

For businesses with large cash flows like contractors and seasonal business owners, this is a simple way to ensure your funds are working hard for you by earning interest on surplus deposits. There is a fee to operate a sweep account, but your banker can help determine what those fees look like and what makes the most sense for your business. Excess cash flow will remain in this fully FDIC insured (up to $170,000,000.00) account earning interest until funds are needed in the checking account at which time money automatically sweeps into that account to cover checks or electronic transactions presented for payment, allowing you to maximize your interest income.

Are you fully insured?

One of the additional benefits of a sweep account is the protection of FDIC insurance for the balance in that account. As a business owner, you should be protecting your business by taking the necessary steps so that all your funds are appropriately insured. All deposits up to $250,000 are automatically insured by the FDIC, but for larger operations, talk with your business banker about additional coverage available.

Utilize technology to improve cash management

How do you manage your cash? Are you receiving paper checks that must be scanned in for deposit every day? In the past, it might have been common for a business with multiple locations to send all checks to a central location where an accountant would consolidate and prepare them to be deposited. These days, there are systems in place to make regular deposits easy and maximize interest income by getting money into the bank as soon as it comes in. Using the mobile deposit feature of mobile banking is a simple way to remit deposits to the bank quickly. If you receive many checks over the course of a month, using a service like Remote Capture makes it easy to deposit them electronically from the comfort of your office. Checks are run through a scanner provided by your bank that sends images of checks to the bank for processing, saving you trips to the bank and getting checks deposited as often as they are received so you can begin earning interest on excess deposits.

Elizabeth Hayward, SVP, Business Banking. Image provided by Machias Savings Bank.

Your banker will work with you to determine whether mobile capture or a check scanner is better suited for the number of checks you deposited monthly. With mobile capture, the bank’s online banking mobile app would be needed on your mobile device. The check scanning option would be used in tandem with your personal computer in conjunction with the bank’s online banking platform.

Make sure you’re mitigating risk

Be sure you have measures in place to monitor accounts and mitigate any risk of fraud. For example, your bank probably offers Positive Pay or a similar tool to authenticate checks written by your business. With this system, your accounts payable software provides the bank with check information (such as the check number, dollar amount, date, and payee) that is cross referenced at the

time of deposit. If anything doesn’t match up, the check will not be deposited, and your business will be notified to confirm or deny authenticity. This tool is your business best solution to mitigate the risk of fraud

Business owners have plenty to navigate this time of year but taking these steps sooner than later will avoid mishaps down the road and set you up for success for the rest of the season.

Our business bankers are here to help.

Comments are not available on this story.

filed under: