Three questions to ask when choosing a bank

The story is a familiar one. A small-business owner is talking with his banker, who casually mentions the money he could be saving with a particular service.

"I liked what I heard," the owner said later. "But we've been working together for years; I just wondered why he hadn't brought it up sooner."

We've all been there, learning too late about the time or money we might have saved had we only known about an option available to us. And we wonder: Isn't it our banker's and other financial advisers' job to tell us?

The answer, of course, is yes. In a perfect world, your advisers should be meeting with you regularly, listening to your needs and making sure you're taking advantage of the latest and greatest solutions.

The only way to know if you're really managing your money as effectively as possible is to make sure you're asking the right questions when you choose a bank. Here are three to get you started.

1. Basic money management: Do I have the best account for my business needs?

If you tell a banker that you want to open a small-business checking account, there's a good chance that you'll get one. The problem is that might not be what you really need.

It might be better to simply tell your banker how you plan to use your accounts. Then you can have an open-ended discussion about the expected size and number of your deposits and disbursements, as well as your borrowing and investment needs.

Your bank may have a bundled product — a package of services that provides discounts on some services, better interest rates on others, along with other benefits that may appeal to you.

Sometimes you can combine your personal and business accounts and save even more. Don't always assume that a "free" account offers the greatest value. Paying a little more could yield significant benefits in the long term.

Don't forget your employees in this discussion. Employee banking programs allow you to deposit your employees' earnings directly into their checking accounts — saving you the cost of cutting payroll checks and often providing your employees with faster access to their cash. Employee banking programs offer financial options that are added benefits for your employees.

2. Cash management: Am I doing everything I can to improve cash flow, streamline payment processing and reduce costs?

Every small business I know wants to manage its finances smarter. The good news is, there are countless tools available today to help you do it. The key is learning which ones are best for you.

Businesses that receive paper checks, for example, can gain access to funds faster and improve cash flow by processing them electronically. Remote deposit technology makes it possible to process receivables as you receive them, right from your office computer, rather than making trips to the bank. That saves time and money.

If you have a service that your customers pay for monthly, it may be time for an automated clearing house solution that automatically transfers customer fees from their checking account into yours.

A business that requires employees to visit customers' homes or offices may similarly benefit from mobile technology that enables them to take electronic payment before they leave.

You'll not only streamline your invoicing process with tools like these, you'll reduce the number of bad checks you receive and must later collect on.

3. Expense management: Am I managing my expenses as efficiently as possible?

Expense management is more than just paying the bills. It's knowing you have the proper controls and reporting tools in place to guard against fraud and are saving time or money in the process.

There are a host of commercial cards available to help you achieve these goals. Fleet cards, for example, can help you manage fuel, auto maintenance and repair expenses.

Purchasing cards can decrease your reliance on purchase orders, invoices and checks. Commercial cards can do both, while also managing your travel and entertainment expenses. Converting to electronic payments can give you additional control.

It's what they know and who they know.

When you pick a bank that specializes in your industry and has been through the ups and downs of business cycles, you might get more for your money as well.

An experienced banker with an extensive portfolio of businesses can make referrals for a new business and share best practices that have helped other companies succeed. And bankers who are honest enough to tell you what they really see, not just what they think you want to hear, are worth their weight in gold.

With expense management, as with all financial management, just remember that one size does not fit all. After asking about and listening to your needs, your banker should be able to offer a solution that is tailored to your company, which is what you really wanted all along.

Crystal Parrott is Commerce Bank's small-business banking officer. She can be reached at 316-261-5547. Interested in writing for "A Business Perspective"? Contact Dan Loving at 316-269-6706 or dloving@wichitaeagle.com.