What’s efficient, eFFECTIVE & eCONOMICAL? It’s eBANKING!

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• August 2007 Issue
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From the August 2007 Issue

The owner of a small distribution company dreaded payday.

It wasn’t the money; employees did well and he was happy to pay them. It was the mass exodus. Extended lunches and hours lost to the Friday rush to the bank. The solution was simple: Direct Deposit. Come payday, the money shows up in the employee’s bank account. They got back their lost hours while also improving employee satisfaction. It turns out that employees did not enjoy the trip to the bank either; one of them had to deal with six different accounts. And it was just icing on the cake that the company could print its Payroll Direct Deposit remittance advice on blank paper and stop ordering check stock so often.

What a wonderful innovation. The Direct Deposit was low cost, easy-to-implement and had an immediate payback. Looking back, the only question was this: What took so long to do it? Well, the answer is that it required knowing how to open the gate.

The Discovery of eBanking
The floodgate opened to the world of eBanking — a host of opportunities to integrate electronically with your bank and automate more of your business processes. What Direct Deposit did for your employees (or your client’s employees), the ACH Transfers can do for your payables and receivables. Tap into the electronic flow of money from customers or to vendors.

“There were nearly 16 billion Automated Clearing House (ACH) payments made in 2006,” says Elliott C. McEntee, President and CEO of NACHA, the governing body over our electronic banking system. “That was a 14.5 percent increase over 2005. Annual ACH payment volume continues to double every five years.”

To be able to talk the lingo when you do payroll direct deposit or add the electronic payment option to your payables and receivables, you’ll need to know the acronyms. (It wouldn’t be technology without an acronym, now would it?):

ACH: The Automated ClearingHouse Network, a highly reliable and efficient nationwide electronic funds transfer system.

NACHA: The Electronic Payment Association, (formerly known as the National ClearingHouse Association). This is the governing agency over ACH. It sets the operating rules that provide for the interbank clearing of electronic payments for participating depository financial institutions.

With ACH Transfers, most integrated accounting systems offer the ability to electronically pay bills online and process cash receipts. This translates into no more lost checks that your vendors never receive and no more long waits on cash receipts when the “check’s in the mail.” Your customers can also transfer money to you using the ACH system. Like Direct Deposit, the low cost, easy implementation and quick payback is there with ACH for payables and receivables. And, like with Direct Deposit, there are unintended added bonuses.

Hotel Management Client Example
A hotel management client was prone to storing stacks of different colored checks so it could keep checking accounts separate for each property managed. Someone was assigned to monitor check stock to be sure they were using the right stock for each company. One day, the nightmare happened: They sent out checks for one company printed on the check stock of another company. What a mess.