The Business Monthly-June 1999   www.bizmonthly.com

Bank Drafting--Cash Flow Solutions for Businesses

by Kelly Campion

One of the best decisions a business owner or manager can make is not trying to do everything in-house. It just isn't cost efficient to hire, train and compensate someone to perform certain tasks. By turning the whole process of fee collection over to an outside firm, for example, a company can utilize its own staff to do the things that actually generate income for the company. Outsourcing is the wave of the 90's and will continue into the next century as the most effective, efficient way to operate a business.

If business owners could have most of their account receivable payments delivered to them on the first of the month, many of the problems faced would be solved instantly. Cash flow problems would disappear, freeing up the owner's and staff's time to do things that generate income. The routine service of attempting to collect money already earned can be turned over to a service agency, just as most companies turn over their taxes to an accountant and their payroll to a payroll service.

Licensees of the National Bank Drafting Systems (NBDS) exist nationwide to provide this service. Using pre-authorized checking, customers sign an authorization form for the amount of each bill to be automatically deducted from their checking accounts on the due date. Their check is duplicated and delivered to the company to deposit. Customer's checks are returned with the other checks written in their bank statement. They eliminate the check writing chore and the cost of postage. They don't have to worry about late charges or making payments when away from home or office. Many businesses have been able to eliminate invoicing and save the costs and time involved. According to the SBA, in some instances the cost of sending an invoice can be in excess of $2.50 each when broken down into stationary, printing, postage, preparation and processing time.

Another headache business owners face is receiving bounced checks. Resubmitting checks, expensive bank fees, loss of revenue, the personal confrontation with customers, embarrassment of the check writer, are all part of the expensive and stressful nightmare of collecting bad checks. Merchants can now take advantage of a service, free to them, to collect NSF checks electronically. Here's how it works: The merchant obtains authorization from the check writer that if the check is returned NSF, it can be collected electronically. These checks are then automatically forwarded to a processing center. The balance of the account is checked for up to 60 days, and the amount of the check debited from the account when it is available. The check writer pays the fee for collections. Many businesses are using this free service instead of check guarantee or verification services, which sometimes cost more than the checks collected.

Bank drafting offers telephone and Internet shoppers credit card convenience for check customers. Any service, product, reservation, donation or collection can be paid with this process. According to NBDS, only one out of four checking customers hold credit cards with available lines of credit. Businesses can expand their market, increase the return of their advertising dollar and reduce the high cost of credit card transaction processing by using this service.

The newest payment processing technology converts check taken at the point of sale into an electronic debit, then deposit the funds electronically into the business's account. These innovative services provide cash flow solutions to all types of businesses.

Kelly Campion is President of Capital Bank Drafts, Inc. She can be reached by phone at 301-262-3726, or by email to bankdrafts@verizon.net. Or visit www.capitalbankdrafts.com for more information .