Too many unsuspecting owners and controllers think they’re really smart when they leave enough cash in their checking account to not have to pay any checking account fees. That’s not the best way!
Before you read any further in this article, go get your analysis statement. See where it shows your average daily collected balance? Now see where the bank has subtracted 3 or more percent of that amount for federal reserve requirements? That means the bank is only paying you interest credits to use toward bank fees on 97% or less of your money!
Before closely examining their analysis statements, many business owners fall into the banker’s clever trap — if a customer doesn’t have to write a check, they’ll think banking with us doesn’t cost anything. Well, that’s wrong. It’s the hidden costs that hurt the most — like the cash thrown away from too much inventory and receivables! Even though you don’t write a check, it sure costs you money!
There are two ways to help your company when it comes to analysis fees:
1) Don’t leave any cash in your non-interest account.
2) Negotiate lower fees with your bank.
Look again at your analysis statement. The second page should show the details of your charges. Identify the one item that cost you the most that month. Was it cash deposited? Was it checks deposited? Was it bad check charges? The highest one or two items are those you will want to concentrate on to negotiate a fee reduction.
For negotiation purposes, figure that your bank is making a 100% mark-up on each cost on your analysis statement. You should be able to cut at least a few fees in half and still allow the bank to make a profit.
As you negotiate, keep in mind bankers look at every source of revenue you bring to them when pricing your loans and deposits. Interest on loans, fees on cash management services, deposits, even trust account income on 401K and profit sharing plans are factored in the equation. The more business you conduct with a particular bank, the more accommodating they should be to you.
Also, keep in mind that you may be relatively big business for your bank. Look at your annual revenue and then the typical annual revenue for other businesses in your area. Chances are, you are one of the big fish. Sometimes your banker needs a little reminder of that fact.
So…negotiate a deal on your analysis fees and then don’t leave cash sitting idle in your checking account.
