BERLIN – Changing banks or even banking processes can be a serious decision for small businesses. A disruption of any kind in a company’s cash flow can have a significant impact on its operations; however, with the many benefits of online business banking today, the move to cyberspace can prove worthwhile. Online business banking can deliver two things to small businesses that money just can’t buy — time and peace of mind.
Business owners across the country are already realizing the convenience and benefits of using this service. The percentage of small businesses that use the Internet for online banking has more than tripled in the past three years, rising from just 12 percent in 2002 all the way to 42 percent in 2005. This trend in banking services comes as a result of companies discovering how this tool can help them manage their operations as efficiently as possible – meaning they can focus their time on tasks essential to running the business rather than administrative chores such as bill paying.
Small business owners also get peace of mind from knowing that with the enhanced security options available online, there is no more risk of fraud than with traditional banking.
Because you’re not constrained by “banking hours,” today’s online banking systems offer the same functions as your local branch, but faster, more efficiently and more cost-effectively than an in-person transaction. In sum, you can do almost all of the banking transactions online that you would typically do over the phone or in person. For example, business customers typically have access to an advanced version of BillPay, an online consumer program that’s become extremely popular among retail bank customers. After you set up your account, you can make vendor payments and distribute employee paychecks.
With real-time access to your account, you always know where your cash is and, more importantly, where it’s going. This is especially important if you have more than one account or do business with more than one financing institution.
By connecting that account electronically to an online business investment account, you can sweep excess cash out of your deposit account into a number of investment choices. Then, just as easily, you can move the cash back into the primary account whenever you need it. The result can be a higher return on cash that once sat idle.
For tighter controls on cash flow, you may want to consider using an account with a debit card attached for all of your business expenses. You can log on anytime to see where the cash is going, and at the end of every month you or your bookkeeper can download that information directly into your in-house financial management program, such as Quicken® or QuickBooks®, streamlining your reconciliation process. This will automatically direct each expense into the proper classification, so all you have to do is print it out or send it electronically to your accountant at tax time.
Online banking can actually be more secure than traditional banking because most online banking services use 128-bit-encryption SSL (Secure Socket Layer) to protect your data.
Online banking functions can also enable you to decide who has access to what information. By setting up different levels of control, you can delegate more while instituting checks and balances throughout the system.
The old adage “time is money” has never been truer than in today’s global economy. Talk to a financial advisor about how online business banking can help save you both.
(The writer is a Merrill Lynch Senior Financial Advisor. She can be reached at 410-213-9084.)