Cutting Costs

by Ashley Carson, Senior Vice President, Corporate Banking

In this challenging economic environment, I frequently come across clients who are scrambling to cut expenses. Companies can find quick improvement to the bottom line through what I call a "Deposit Checkup" - a detailed review and assessment of a company's analysis statements. The "Deposit Checkup" process calls for you to work with your banker to compare the banking services you currently use and the fees you're being charged against the actual needs of your organization. I have encountered many organizations that have not reviewed their analysis statements in several years. These companies often assume that rising service charges simply reflect increased activity levels. But in reality, firms often have flat or reduced account activity and are simply paying more in service charges. By reviewing all of this information and making appropriate changes to services, you can streamline activity and also greatly reduce expense.

Many companies have operating accounts that generate "earnings credit," a calculation of interest paid on deposit balances, which is used to offset banking fees.  Clients with larger deposits balances tend to pay lower bank fees because their earnings credit offsets their service fees. Unfortunately, the earnings credit rate has continued to decline, resulting in lower earned interest to offset service charges. This means that in order to mitigate service fees, organizations may want to consider shifting money from savings accounts to operating accounts. In this low interest rate environment, the benefit of off-setting bank service fees is often better than the interest earned on those dollars.

 
As banking fees rise for many companies, a natural next step is to identify what services are required and what services can be discontinued. Analyzing banking fee information can also help generate more efficient business practices within your organization. For example, this may be a good time for your company to begin utilizing online ACH payments instead of more expensive wire transfers, or to begin using remote deposit capture instead of sending an employee to make a physical deposit at a retail branch. Identifying these types of changes can save both money and employees' time.

Organizations can begin the "Deposit Checkup" process by reviewing analysis statements in detail and by scheduling time to discuss them with their banker. Clearly, the amount an organization can save will vary based on both the volume and type of banking services utilized. The truth is there are numerous ways to unleash additional cash flow for both not-for-profits and for-profits by finding savings in treasury fees. As such, it behooves organizations to do some proactive investigating with their banker and pay attention to the details. By taking the time to review these bank statements in detail and make appropriate changes, your company or organization may be able make significant improvements to its bottom line.

 
To schedule a Deposit Check-up with Ashley Carson, please email her at ashley.carson@atlcapbank.com.