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By Heritage Bank on December 12, 2023
5 minute read

Stressed About Getting Paid or Paying Your Vendors On Time?

Turn To Your Bank for Cash Flow Solutions

Everyone from software companies to the online store you use to order household items and books are touting small business solutions for customer payments and vendor payments. Before you partner with someone new to the payments industry or cobble together a series of solutions from different vendors, talk to your bank.

Banks are more than places to deposit business funds or borrow money. Banks specializing in small business solutions, like Heritage Bank, can also provide payment services and other financial tools to help manage your cash flow more effectively. In fact, community banks with significant business banking portfolios are the place savvy
small business leaders turn first for customer payment options and vendor payment solutions.

Too often, first-time business owners assume services under Treasury Management are designed for larger businesses when nothing could be further from the truth. Or, they don’t even know they should depend upon their bank to provide these solutions.

Heritage Bank exists to help small businesses in our region flourish, so we built a Treasury Management Department featuring the kinds of services many business leaders expect from a national bank, all designed to work well for small businesses.

Managing Cash Flow End-To-End

#1: Getting Paid Fast

It is essential to collect payment for services and merchandise from your customers as quickly as possible. The number one reason small businesses fail is lack of cash flow. The key is to offer convenient payment options and to be set up to collect quickly and predictably.

Be Credit & Debit Card Friendly

Convenient options generally include accepting credit and debit card payment. Ask your banker about merchant payment processing, and consider these tips and insights when selecting the equipment and functionality best for your business:

      • When a customer pays using a credit or debit card, you have access to those funds almost immediately. You also do not need to mail out invoices or send reminders to pay.

      • More and more customers like to use their smartphones to complete
        payment at retail establishments whether brick and mortar or online. It is not only easier than carrying cards, it is more secure since smartphone payment apps encrypt payments using their customers’ cards, protecting the buyer from crypto criminals.

      • Increasingly, younger consumers are moving away from checks. There are Gen Z consumers with income and regular transactions against their checking accounts who have never written a check. Banks have started offering checkless checking, requiring customers to use a debit card in lieu of paper checks. Don’t miss out on this customer segment by ignoring the reality of how they buy.

      • So much purchasing has moved online, and the most convenient way to pay online is with a credit or debit card.

      • If you are a business-to-business company, credit card payment is
        increasingly critical to securing customers as well as their prompt payment. Many businesses use rewards cards or purchasing cards that offer cash back incentives in exchange for charges. Help them earn those extra points. Also, using a credit card to pay will give your customer some cushion in their cash flow since payment will not be due for several days.

      • Provided you are using the right equipment, accepting credit cards can
        allow you to securely keep a customer’s credit card information on file for
        easy future use or for easy, inexpensive renewal of services.

Heritage Bank’s merchant payment processing partner offers competitive service charges as well as a wide range of technology. Customers also have the option to pass along any credit card service fees to the customer.

Get Paid Predictably

If your business model includes regular weekly, monthly or quarterly payments, consider helping your customers set up Automated Clearing House payments or ACH payments. With your customer’s permission, regularly scheduled payments will be withdrawn from a bank account designated by the customer. ACH is a great way to predict when recurring payments will end up in your bank account.

Deposit Checks As Soon As Your Receive Them

Checks are still a preferable form of payment for many consumers and businesses. So, be prepared to process checks quickly so the funds are in your account when you need to pay vendors.

Mobile Deposit is available to all Heritage Bank business customers. Some of our business customers have even set up mobile deposit to allow employees accepting payments at different locations to deposit checks in real time (think of a team of plumbers working at different homes and businesses on the same day).

For larger checks or to manage check deposits from a central location without making a trip to the bank, Heritage Bank offers Remote Deposit or Merchant Capture. Using a desktop scanner, businesses can quickly and securely deposit checks while retaining digital records of those deposits.

Cash Payment Is Still King

Many businesses and consumers still like to pay in cash. And there are
advantages to accepting cash payments - no invoicing, no waiting for payment. If that works for your business model, focus on how you are going to securely move that cash into your bank account.

      • Use the night deposit box at your local bank to securely deposit cash after bank operating hours, especially a large amount of cash. Your bank can
        supply you with deposit packets. Heritage Bank does not recommend
        using ATMs to deposit significant cash from business transactions.
      • If you need to securely move a large amount of cash from your place of
        business to the bank or to secure the change you’ll need to complete cash transactions, ask your bank about secure cash transport. You might also ask about Cash Vault Services which enable businesses to complete cash deposits remotely and access those deposits in advance of the cash arriving at a branch.

#2: Pay Vendors Promptly

Every business prioritizes prompt payment, including the vendors you rely on to run your business. Heritage Bank offers a range of solutions for vendor payment. Not only can these solutions save you time, they can save your business’ credit rating and build solid relationships with key vendors.

Slow paying businesses often earn bad reputations with their vendors that can spread across an entire industry. That behavior can result in less advantageous pricing, a freeze on future orders and even hesitation among vendors who have heard about your slow paying ways to extend payment terms beyond point-of-purchase. Those 15 to 30 days vendors generally allow their business customers to pay can take the pressure off your accounting department and give you a cushion when balancing incoming cash with outgoing vendor payments.

Whether it’s a low APR credit card or a business rewards card, paying by credit card offers you some room to breathe if it’s a high expense month or quarter. In addition, a rewards card (including purchasing cards for high volume usage) can earn you cash back over the course of a year.

Heritage Bank has a range of credit card options for small businesses. Sit down with your banker to determine which card or cards work best for your business.

Let Your Bank Pitch Hit For Accounting
Expecting a large number of check payments you want deposited immediately? Need to relieve your accounting department of critical but clerical functions? Lockbox Collections may be the perfect solution.

Arrange for payments to be mailed to a Heritage Bank post office box. We’ll post the payments and credit your account the same day payments arrive, then send you copies of the invoice, envelope, check and all information contained in the payment envelope.

Wire When Urgent
If your bank does not make it simple to send same-day wires for critical purchases and business transactions, it’s time to shop for a new bank. Wiring money through a bank is secure, whether you’re sending money within greater Cincinnati, a nearby city or to another country.

Secure a Line of Credit
If your business requires you to make large purchases weeks or months ahead of going to market, ask your banker about a line of credit. If your business is cyclical, producing most of your payments during key parts of the year, a line of credit can help stabilize your cash flow.

You will need to complete an application, just as you would for a loan, and determine whether you want a fixed or variable interest rate. Once secured, you are advised to only withdraw the amount of money you need to sustain operations or complete key purchases at any given time, then repay the amount withdrawn as quickly as possible while staying cash flow positive. The advantage of a line of credit is that you only pay interest on the amount withdrawn rather than on the total amount approved. Many businesses secure lines of credit as a means of managing unforeseen business challenges or opportunities.

Let Us Know How We Can Help.

If you are struggling to manage cash flow or just want to better understand how a community bank specializing in small business banking can help to streamline your financial operations or ease financial headaches, reach out to Heritage Bank. Any banker can start the conversation or you can reach out directly to our Treasury Management Leader.

Heritage Bank is locally owned and resolutely independent. Decision makers live and work in the communities we serve. Heritage Bank is the recipient of the Better Business Bureau Cincinnati Torch Award for Ethical Leadership, a 9-time Top Workplace and one
of the region’s ten largest banks.

Published by Heritage Bank December 12, 2023