Cash management is a problem for all businesses, but especially if you’re growing. It covers a lot of ground, from taking on additional payment options, managing your accounts payable, and avoiding the evolving problem of fraud, especially cyber fraud. In today’s episode we’ll look at ways you can improve your cash management so you can grow and prosper.

Rich: My guest today has over 25 years of banking experience, including 15 in cash management. His success has come from a collaborative approach to working with others. He strives to build strong relationships with coworkers and customers, which allows him to deliver an exceptional customer service experience.

“Whether the clients are either large or small, my goal is to make sure they have the right tools in place to support their business needs and grow”, is his mantra. Today, we’re going to be talking cash management with Jim Edwards. Jim, welcome to the program.

Jim: Thanks, Rich, appreciate it.

Rich: So Jim, let me start with an easy one, it’s early in the morning for me. How do you define cash management?

Jim: Yeah, that’s a great question. You know, cash management for us is really providing products and solutions to our business customers that just really make their lives a lot easier. Whether it’s the ability to collect money more efficiently, get money in the bank with products and services that help them do that more efficiently, or the ability to make payments more effectively and manage the cashflow better. That’s really the goal of what we try to do in the cash management group. And all of that with an eye to fraud prevention. Really a critical component of what we do today, is to really try to protect our customers from potential fraud in the industry.

Rich: Well, maybe that’s a good place to start, because I did want to ask you about fraud. What are the challenges today when it comes to fraud? Obviously, fraud has been around forever, but now we’re dealing with a lot more cyber security issues, cybercrimes. What are some of the ways in which fraud impacts a business’s cash management?

Jim: Yeah. You know, I think specifically to that, business email compromise – or also what is known as email compromise – is probably one of the most damaging fraud circumstances that customers run into today. We do so much of our work through email communication, and it’s a wonderful tool. It’s just advanced the way that we communicate with ourselves and each other. But there’s an inherent trust there that shouldn’t be there, when it comes to certain types of communication. Many times our customers see requests from who they think is their customer on the other end of the email to change payment instructions, to send monies differently. And really, it’s critical to just pick up the phone and ask a question, because that prevents that type of an issue.

Rich: I know of a business who had a similar situation where they had not sent out a client the final invoice, but somehow, they had gotten hacked – and I don’t know the details of it – but the email invoice went out and the client was instructed to pay that amount and send to a different address. They took care of it and suddenly the business I was talking to didn’t receive the money. The business that was the customer said, “Well, it’s not our fault, we paid.” And it became a really difficult situation for both sides. Is that the kind of thing you’re seeing out there these days?

Jim: Absolutely. You know, I think early on when online banking really became more of a popular tool there was really a focus of the fraudsters trying to get inside of that system or try to steal money that way. And we’ve done a really good job of sort of tightening up the security around that. So email is definitely the spot, and the description of what you just gave is exactly it. It’s just a fraud that is easily done. It’s easy to pretend you’re somebody else in an email. You know, the folks that do this are pretty good at what they do, unfortunately, and they’re convincing. And so, really pick up the phone, confirm those payment instructions, is the one thing that would help us.

Rich: All right. So that’s the big takeaway when it comes to fraud is, if there’s any question at all, any changes perhaps in the payments you’ve been doing, it’s better just to get somebody on a call and just make sure that they really did want to see that change happen.

Jim: Yeah. And we see it in all areas. Again, we see it from a vendor perspective. We’ve seen it from an employee and a payroll perspective. Many of our employees have direct deposit now. Now we’ve seen those types of payments impacted. Really it’s a spectrum of all payments, ACH, wire payments. You know, if there’s any change in something that you’ve had in place that’s working, it’s really good to pick up the phone and verify it.

Rich: And I guess this one thing for the owner to know these sort of things, but obviously a lot of businesses may have multiple people touching this. Do you have any recommendations on the messaging we should give our employees when it comes to this type of fraud?

Jim: Yeah. You know, education is a big tool of what we try to provide to our customers when we meet with them on an annual basis. And really, it’s about educating our employees that email is work-related, try not to combine those two worlds of personal and work. To use your business tools for business purposes only, not going to social media sites, and those kinds of things. Because we really found that’s where a lot of this is coming from. So if we could just educate folks not to click on a link or to answer an email that doesn’t seem right, we’d be much further along.

Rich: Alright. That was great conversation about fraud. Let’s get back to cash management. I’m just kind of curious, what drew you to this segment of banking and finance?

Jim: Oh, that’s a great question. You know, I think that I was in the retail side of banking and did a little bit of work on the commercial side with businesses, and really found a nice niche there, and working with business customers and this segment of it. You know, having the tools to make things more efficient, really sort of fits into what I like to do with my customers and providing solutions. And so it was just a natural sort of gravitation towards this career.

Rich: Awesome. When business owners and customers come to Machias Savings Bank, are you their first stop, or is it more like you’re the specialist and they go first to their business banker, who’s more like the primary care physician. And then at some point they’re like, oh, we should bring Jim in on this. How does that work for customers of the bank?

Jim: Yeah, I think in most cases, our business bankers and our branch managers are really the face of Machias Savings Bank. And we’ve worked really hard over this last year to sort of work on our collaboration with those teams and to be sure that we’re partnering with them as best that we can to help our clients. You know, we have a great team of business bankers and branch managers. You know, they recognize opportunities that they bring us in on. But we also have some pretty solid cash management sales folks out there as well in the marketplace that are talking to customers and doing the same. So we all are really trying to bring business in and look at our base and help them.

Rich: Awesome. What does it look like when you’re working with a business on their cash management? What does that relationship look like? Are we meeting with you regularly, or is it more like you come in and take a look at things and provide some advice and assistance?

Jim: Yeah. So initially we love to have that payment conversation. And we just start really at the base level of questions. You know, sort of, how do you do your business today, and how do you pay your clients? How do you collect money for the things that you do? Really sort of try to build a picture around that.

And then as we sort of build our relationship with the customer, we’re definitely reaching out and talking to them, at least on an annual basis, to talk about things that we’re seeing in the industry, business email compromise. Again, one of those things that we’re trying to bring education to. So really, it’s painting the picture initially is sort of how it’s being done and give some options of the solutions that’ll make things more efficient, and then continually sort of be in contact. You know, many of our customers reach out to us on a regular basis for help and for advice, and we provide that. And we’d like to have those relationships with as many of our clients as we can.

Rich: You’re working with a bunch of different businesses. What are some of the biggest and most common mistakes you see business owners make when it comes to cash management?

Jim: Yeah, I think we still continue today to sort of live in a world of checks and paper. You know, there’s so many opportunities today to make payments more efficiently that can manage cashflow better for you and are just really much simpler for businesses. And we still are in a world of sending a check and taking a check for payment. And it really is changing. We’ve heard for years now, the demise of the check and the paper was going to go away, and it has to some degree. And it’s certainly based on some information I’ve been reading recently. During 2020 things changed again, you know, there was really not an opportunity to be in the office to open an envelope, to take a payment out. There was a recognition I think, of a change needed to be made. So, we really have seen an enhance of that, but would love to see more and more folks sort of understand sending a check and collecting a check is just not efficient at all.

Rich: It’s interesting. I’m coming up on 25 years in business and we of course started with checks, that was the only way really to pay us. We didn’t take credit cards for a long time. Then we kind of dipped our toe in with PayPal. After a certain point, we started taking credit cards. And what I’m seeing today is, I mentioned to you before I went to a massage therapist and of course she took Venmo. So a lot of the smaller solopreneurs we see doing some of this, but not as many of the bigger companies. What do you think businesses should do, general advice, in terms of accepting new forms of payment?

Jim: Yeah, I think – you’ve mentioned Venmo – there’s so many third parties that have sort of filled some of the gaps for us that we weren’t in, that we need to sort of try to get into. Some of the things I’ve read, you know, about sort of these types of services that customers would really rather do business with their bank for this type of service, but they’re going to Venmo and these types of places because we don’t offer it. So, we need to enhance, and we’re constantly looking at the opportunities to enhance what we offer so that we can provide those kinds of services. You know, I think credit card is a big component of it. I think being able to accept debit and credit cards for payment is critical. You know, it used to be that retailers were sort of the focus of that, but we’re definitely seeing your growth in sort of business-to-business type of transactions, where a business might buy raw materials or some type of product from another business, and they want to use a credit card or vice versa. Somebody bought something from you, and they want to pay you with a credit card.

Rich: And obviously another payment source is ACH. And I’ll admit, I was a little slow to accept ACH as a vendor. Not because I didn’t want to get paid in a timely fashion, but because I couldn’t imagine anybody giving up their bank information to me. And yet at the same time, they do every single time they cut me a check. It’s like, it’s the same information that’s there. So, when it comes to accepting ACH, is that a more cost-effective way than accepting credit card payments for the vendor?

Jim: Yeah. Yeah. So it can be. ACH is typically more cost-effective. I think there’s certain payments that may work better for than others. But it’s certainly an option and has increased in the usage over the last few years, for sure. You know, ACH used to really be considered sort of the payment vehicle for direct deposit for payroll. It’s really grown out of that, and we do see a lot of our businesses paying themselves back and forth with ACH. You know, I think it’s dependent on the payment and in what you need and how do you want to get paid? Absolutely.

Rich: Beyond adding some new ways to accept payment, are there other ways in which we can get paid faster? Or is that the big one, and if we’re going over talk priorities, it’s really about accepting new types of payment?

Jim: Yeah. I think it’s really about accepting new types of payment and proactively sort of offering those tools. I think that in many cases, customers might accept credit cards, but they don’t necessarily put it out there that they accept a credit card. Because there’s this perception of the costs associated with it as it’s too much. You know, so I think we hold that back. So, you know, I think that providing options to customers, multiple options, you can pay with an ACH, you could pay with a wire, you could pay with a credit card, I think those are the types of things that we need to do. Be more proactive at sort of sharing those options. Because customers are looking for that. And not knowing that, you’re probably going to get a check, right? So they’re going to mail you a check, and that’s not what we want.

Rich: So one side of the equation is obviously we want to get paid faster as a business. The other thing is we want to slow down the money going out of our company. Do you have any recommendations on how we can hold on to our cash a little bit longer before paying out? And should we be dragging our feet? I’m not saying make somebody wait past the due date, but are there other systems that we can put in place so that we can hold onto that money as long as possible?

Jim: Yeah. So really again, it goes into that whole electronic world. Because when you send an ACH transaction out to a customer, you tell us in that file what day you want that effective in that customer’s account. So if the payment has to be due by the 15th, then you tell us to pay them by the 15th. And as long as you get that payment to us in time, typically 48 hours before, it’ll be in their account on the 15th. So the ability to sort of hold onto those funds until the very last minute and improve cashflow is there with electronic services.

Credit card is, again, as mentioned earlier, businesses using credit cards to pay other vendors has become even more popular for a lot of reasons. But simply put, if you use a credit card today to make a payment, that money gets charged to your account, but your statement may not have until the middle part of next month. So let’s say that’s 15 days from now. And then you typically have between 20 and 15 more days after the statement cuts to actually make the payment. So then you’ve gained essentially 45 days of cashflow. And you have the products and services that you need.

So a smart business or somebody that can turn a product fairly quickly, could potentially buy a product, get it in-house, sell it, get the money for it, and pay for the product with the money that they get for selling it. So, credit cards have definitely improved the cashflow process for clients.

Rich: And obviously, if you’ve got more cash on hand, you can take advantage of opportunities as they show up. And if this show is all about growing Maine businesses, then this is another way to just give you more opportunities to maybe take advantages of situations as they arise.

Jim: Yeah, exactly. It’s really about providing tools that help the business sort of control the cash flow process a little better. You think about the way we used to do things. It was essentially write a whole bunch of checks, you put them in the mail. And theoretically, you should think that money has left your account, right? I mean that it’s gone, one check could clear on one day, one check another, but that basically it’s gone. Now with these tools, the ability to sort of make these payments and know exactly when they’re going to post to your account, is really important to improve.

Rich: You think it makes sense for businesses, when they’re the customer of another business, to be asking for better terms or different ways of payment? Is that something that you recommend to your clients?

Jim: Yeah, I think so. And I think that given the opportunity to pay with an ACH or credit card, your vendor is seeing that as solid payment. You know, there’s less effort for them to collect that payment. They don’t have to open an envelope and make a deposit ticket out and go to the bank and deposit your money. So those types of payment transactions really benefit your client, your vendor. And I think that they should and probably would provide. And if you were going to try to take, you know, often there are discounts for paying early. Again, with ACH, if you have to pay by the 10th day, you can set it up so that you make sure you pay by the 10th day and you take advantage of those options.

Rich: Are there any other tactics that we haven’t touched on today that you recommend to your clients as far as improving their cash management?

Jim: Not really. I guess the thing that sort of draws back to me is that we still want to talk about fraud prevention. And a lot of the things we’ve talked about sort of naturally gravitate towards that. So if you send an ACH payment, you’re not sending a check, and you’re not sending your information out to somebody you potentially don’t know. Same with a credit card. If you use a credit card to make a payment, you’re not providing your banking information to that vendor. So, you know, all these tools are set up for efficiency sake, but really, it also provides that fraud prevention that we’re really trying to help customers put in place.

Rich: Fantastic. Jim, this was great. I always like to ask this question of my guests, so I’m going to ask you now. What one thing would you change if you could to improve the business ecosystem here in Maine?

Jim: Yeah, we’ve sort of touched on it before and I’ll say it again. I really wish that we focused on education around business email compromise and email compromise. It’s such an easy thing to provide. And again, we depend on this email to help us communicate with our customers. And it’s a super-efficient way to do that. But at the end of the day, if you just pick up the phone and talk to somebody, a real person, it just makes all the difference in the world. So I’d love to see more awareness of that. And it would really sort of help stamp a lot of that.

Rich: Awesome. This has been great. Jim, if people want to connect with you, maybe because they’ve got cash management issues, where can we send them?

Jim: Yeah. So, you could reach out to me at Machias Savings Bank at jedwards@ machaisavings.com. Or you could certainly give me a call at f207-561-3935, and we’ve got a great team of folks here and love to help you.

Rich: Awesome. And we’ll have those in the show notes. Jim, thanks. This has been very enlightening. I appreciate your time and experetise.

Jim: Thanks, Rich, I appreciate it.