When community bankers talk about cash management, many refer to it as something completely alien to the smaller bank. They think of fancy programs an(i sophisticated equipment iiistaiitziilcously iiioving customers' iiioney from place to
Others steer clear of the the service for a different reason. "Cash management techniques to improve cash flow will Oilly rob us of de.. posits frojii our good business custom-
ers, so why educate these cus- tomers'?" they say.
Both assumptions need corrcction.
Cash iiiantigement can be pretty siniple. It involves teach.. ing tlie custoiller to keel) cash flow in niind, to try to get checks into tl)e bank in a hurry and to know when bills are due. The alm is to avoid prematurely moving nioney out of the corporate custorti(,r's account.
It should also involve as simple a step as balance reporting on a daily basis by issuing a statement via phone, fax, or downloading.
One favorite story of mine about the simplicity of cash management was provided by the bank cash manager who was asked by the local telephone company to help speed up clearance of bill payment reccipts.
His solution: use red return envelopes for people who usually have phone bills under $100 and blue ones for those with larger average bills.
The cash management technique that makes it all work: Open the blue ones first.
Keeping Clients in the Dark
As for keeping the customer ignorant, that simply doesn't work.
In cash management, moving funds from demand deposit form to Cds, and every other area where the bank's suggestions can help the customer, if the bank does not explain the technique to its customers, someone else will. Then the bank may well lose the entire account when the customer realizes what has happened.
So the community bank that does not help its customers with basic cash management pro-
grams is likely to be the loser for this.
Practicing What You Preach
In this regard, we frequently see that the shoemaker's children go barefoot. By this time I mean that many banks that are trying to explain cash management techniques to customers
ignore tiiose techniques iii tfiell own ol)erations.
How many banks explaill it) etistoiiiers how to take advari. tage of' discounts on payments l'or early receipt of cash, only to ignoi-c titking these discounts iii their own purchases?
lio\a, iiiany banks fail to ;tl. tach tirgk,ticv to the deposit ari(i cle;tj-;il)cl' of checks paid to tll(, baiik ii)r services?
iii sum, most cash man;igl-- metit programsarejustcommon seiisl,: get it fast, pay it sio\a,. C'oriiiiiunity banks should iiot be at anv disadvantage against theii- larger brethren in such an environment.
I t was the day after a three-day weekend. The lady in question had not been able to deposit a big check in her bank during the holiday because there were no envelopes at the ATM.
On Tuesday, then, she came
to the bank in the morning - still ti() envelopes. So into the bank slic went.
Scene: four or five people w(liting. One teller working wliiie another goes in and out of the back room. Finally, it is her
"You have no envelopes at ilic ATM," she states.
Feller's response: "That's not p()ssible!"
reller yells over to the other telter:
"Are there any envelopes out there?"
Other teller mumblcs some- tliing undistinguishable.
First teller completes transac-
tion without a word and then hands customer a package of envelopes for future use.
Suggestions: First, keeping ATM supplied with envelopes is an integrat part of banking. Maybe excuses can be accepted at the end of a three-day weekend for their absence, although a good bank would have someone check the supply during the period. But on a business day it is iii-
Second, calling the customer, who reports this fact to you a liar by saying "That's not possible," for all to hear is not the brightest form of good customer relations.
The lady who reported this was more concerned with the lack of envelopes and the rude teller than whether the bank offers interest rate swaps or check reconciliation.