By helping commercial customers streamline their cash management processes, community banks can add significant value to the relationship. Index, about $523B was “stuck” on the balance sheets of S&P 1,500 companies in 2021 — a $16B increase from the previous year. Poor cash collection management is another layer to the complaints from 78% of respondents about inefficient working capital. When these businesses have turned to their financial institutions for cash management support, over 70% said that the assistance has been “subpar,” leading to higher operating costs, delayed cash pooling and higher debt levels and financing expenses. HOW COMMUNITY BANKS CAN HELP Here are some ways you can increase the value of your cash management offerings to business customers: • Adopt transaction processing. Banks should transition away from batch processing cycles and convert to continuous transaction processing. This switch will help their business customers achieve near real-time exception handling and reconciliation. • Promote automated invoicing systems. Many businesses still handle payments with paper checks and reconcile them with Excel spreadsheets. Banks can help them transition to an automated system that dovetails with their other banking services. • Offer third-party integrations. Provide a digital marketplace filled with third-party financial services. Be sure to check that these services can integrate easily with your own services to make it even easier for your business customers to use them. Cash management services are the obvious target, though a wide variety of other offerings could also fit into a marketplace model. • Use digital payments. Corporate credit cards, digital wallets, the Automated Clearing House and the FedNow® Service can all help a community bank deliver faster end-to-end payments to its business customers. Better capital management improves business customers’ bottom lines. By helping commercial customers streamline their cash management processes, community banks can add significant value to the relationship. To continue this discussion or for more information, please contact Jay Kenney at jkenney@pcbb.com. Dedicated to serving the needs of community banks, PCBB’s comprehensive and robust set of solutions includes cash management services such as Settlement and Liquidity for the FedNow Service, international services, lending solutions and risk management advisory services. Utah Banker 17
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