New Online Banking Tips

In ancient-financial times (say, in the year 2000), banks began offering small business customers the ability to bank online — for a price. Sometimes a hefty price.

You can probably guess what happened next. Business owners responded with a resounding silence. The last thing most people needed was an "opportunity" to pay for something that had been free.

Well, banks seem to have gotten the message. Fees have dropped sharply or have been eliminated on many services. The online banking
offerings have increased. And more businesses are doing at least some of their banking online, lured by convenience, the ability to track their own financial activities online, and the potential of saving time.

"We're now seeing a lot more features and functionalities for small business owners to do more online and to manage their cash flow," says Matthew Lehman, senior analyst with Watchfire Gomez Pro, a research company focusing on financial services.

Among the online offerings becoming more common:

1. Check imaging: About 70% of the banks surveyed by Watchfire in 2004 were offering business clients the option of getting online check imaging. "For the small business customer, this is like having account-tracking capabilities," says Lehman. "Small business owners can use this capability to look at their accounts and see which checks have been deposited and accepted."

2. Deposit ticket review: Another online feature some banks are offering: deposit tickets. "If you are handling a lot of checks, this is a valuable feature because it gives you the ability to go back and see what you were depositing," says Lehman.

3. Coordination between accounts:

4. Electronic banking is part of the general move toward allowing integration between different bank accounts. Lehman says banks are making it easier for small business owners to link their business and personal accounts so they can make online transfers between accounts — rather than the old-fashioned method.

5. Payroll and other services: Virtually every online small business banker has a bill pay component, or the ability to schedule and pay multiple bills

6. at one time. "What you're seeing more of is the capability for businesses to conduct other types of financial activities as well," says Lehman. Among the options: Using online banking to pay suppliers, setting up direct deposits for employees, payroll services, payment of employment taxes and sending out payment in foreign currencies.

Making deposits from your desk Burt Davis, director of small business banking with Netbank in Alpharetta, Ga., says that his institution is trying to be a leader in online services for small businesses. Among the products in the works: a system that allows businesses to automatically collect payments from customers, and a way to allow business owners to make deposits without having to leave their businesses. "We'll have a device in your business office, and you'll be able to scan a check and electronically deposit the funds without leaving your business unattended," says Davis.

This type of feature is similar to what retailers like Wal-Mart have when they take a customer's check, electronically scan it, get authorization for an electronic-funds transfer, and then give the approved and voided check back to the customer.

The services now available and under development reflect financial institutions' increased focus on the needs of smaller business clients. "At first, banks took regular consumer offerings and set them up for businesses," says Lehman. "Then they realized that the needs of consumers are not the same as the needs of a small business, so now they are adding things that are more germane
to small businesses."

Banks may offer basic services, such as the ability to see your account history or to make transfers for free, and then charge extra for such goodies as wires, ACH, tax payments and so on.

Of course, anyone involved in commerce over the Internet has to be aware of threats from "phishers" and other frauds trying to break into individual and business bank accounts. Currently consumers who report an electronic funds transfer problem within two days are generally liable for no more than $50 in losses from their accounts. Business accounts, however, don't get the same protection. If you're victimized and the bank determines that your security (or lack thereof) led to the loss, you could be out of luck. Software and firewalls as well as other security measures are essential for anyone doing business on the Internet.

Most of the online banking services offer ways for business customers to link parts of their banking activities and record keeping with information logged into Quick books, Microsoft Money and other financial programs.
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