Treasury Management Best Practices Jacob Heugly – SVP Manager Treasury Management

What is Treasury Management? Treasury Management solutions are proven to help businesses operate as effectively as possible by: Improving Receivables / Collection Processes Improving Payables / Disbursement Processes Accessing Financial Data Online Detecting and Preventing Fraud Short Term Investments

COLLECTIONS Products that streamline and centralize a customer’s accounts receivable processes.

Remote Deposit  An electronic check clearing application that allows organizations to conveniently make check deposits electronically from the safety and comfort of their office.  Accelerates cash flow by submitting check deposits electronically and securely

How Your Business Benefits  Software is easy to use  Faster availability of funds  Reduces expenses  Extended deposit window  Exportable files into accounting programs  Increased management of funds  Consolidation of accounts

Merchant Services

Merchant Services Options  Allows the client to accept credit card payments either E-CommerceIn person Over the Phone

What to know before you sign!  Pricing  Have you done a side by side comparison?  Interchange Plus Pricing or Bucket Pricing?  Cancellation Fees  Does your provider have a cancellation fee?  Existing Lease Contract for Terminal  Can your terminal be reprogrammed?  Understanding of the Merchant Statement  Fees are hidden in the statements.  Understand the DOWNGRADES

 Lease versus Buy  Make sure to analyze the best hardware acquisition for what is best for your business.  Are you seasonal? Do you need a wireless machine?  Who do you call when you have issues? Service is the #1 complaint. What to know before you sign!

E-Commerce Merchant Transactions  Automate Monthly Payments  Businesses can set up automatic payments for customers  Receive payments online  Integrate with shopping cart to process transactions  Process credit card or ach payments (client’s want the option)  Virtual Terminal Capability  Solution for merchants who manually enter credit card information  Eliminate the expensive Terminal cost

Lockbox

Lockbox Options  Image Lockbox  Daily imaging of all checks, invoices, and backup documentation.  Rather than receiving copies of checks and invoices via mail or costly courier, clients have online access to images and reports the day of deposit.  Retail Lockbox  Captures data to update an accounts receivable system using a computer readable scan document (i.e., remittance stub, coupon, or voucher).  A transmission file is composed from remittance information contained in the scan document and check MICR line.

Retail Lockbox Sample Coupon OCR Line OCR – Optical Character Recognition

Lockbox Benefits  Improved Receivables Float  Mail Float  Processing Float  Clearing Float  Reduced Staff Processing Time  Deposit Preparation  Bank Trips  Receivables Data Key Entry  Increased Audit Controls  Separation of receivables/payables processes  Automated data entry for error reduction

DISBURSEMENTS These tools allow a customer to initiate payments securely and efficiently.

Automated Clearing House

 Direct Deposit of payroll, Social Security and other government benefits, and tax refunds.  Direct Payment of consumer bills such as mortgages, loans, utility bills and insurance premiums.  Business-to-business payments  E-commerce payments  Federal, state and local tax payments ACH Payments The ACH Network is an electronic funds transfer system governed by NACHA which provides for the interbank clearing of electronic payments for participating depository financial institutions. The following are examples of common ACH transactions:

Benefits of ACH  Cost effective – typically less expensive to initiate and reconcile than paper checks  Flexible – later cutoff times  Versatile – Business and Consumer transfers  Pre-Funding – If you are a new business or have credit issues you can pre-fund the transaction.

Positive Pay Check and ACH

Fraud Statistics  Types of Check Fraud  Altered Payee names on the check issued  Counterfeit checks that had the organizations own MICR line but used another organization’s name  Lost, stolen or counterfeit employee pay checks  Fraudulent checks returned by Positive Pay, then presented as ACH debits  ACH Fraud  Organizations are reporting ACH payment fraud activity on a more regular basis  Organizations that suffered financial losses from ACH say it was because they failed to use ACH Blocking or Filtering service offered by their bank.  Business only have 48 hours to dispute an ACH fraudulent transaction.

Payroll Cards  Great solution for the non bankable employee  Reduces the risk of fraud  Card-based, electronic paycheck  Net pay loaded to account each pay period – immediate access to funds  Visa signature-based to provide increased utility to employee  On-line access to balances, transactions and current card information

INFORMATION REPORTING Tools to manage and view accounts securely online, when it is convenient for a customer.

Treasury Management Online System

Treasury Management Online  Provides access to banking information, payment solutions, and specialized reports available in a concise, one page “dashboard”  Built to fit a business’s needs and is easily customizable via the “dashboard”  Helps businesses effectively:  Collect funds from customers  Concentrate funds where they can be most efficiently deployed  Disburse funds cost effectively to vendors, employees, and investors.  Allows businesses to conveniently manage user privileges

INVESTMENTS Tools used to match business’s investment guidelines and help capitalize on excess cash to pay down balances or earn money.

Sweep Account

What is an Investment Sweep Account?  A tool used by customers to automatically invest excess funds in their checking accounts.  Each night the excess funds are swept into an investment account.  If debits are presented to the checking account, in the morning the funds will sweep over from the investment account to cover the debits.

Investment Sweep ZBA Master Account ZBA #1ZBA #2

What is a Cash Manager Sweep?  The cash manager sweep sweeps funds from the investment account to pay down the client’s line of credit.  If the line of credit does not have a balance, the funds remain in the investment account earning interest.

ZBA Master Account ZBA #1ZBA #2 Line of Credit Investment Sweep Cash Manager Sweep

What is a Credit Sweep?  A credit sweep is a direct DDA to loan sweep, which means that if there are excess funds in the DDA and the line of credit has a balance, it will sweep over the funds to pay down the line.

Credit Sweep DDALine of Credit