How to Manage Your Cash Better

Banks will match your vendors against a database of those that take credit cards. "Some bankers will take your accounts payable list and try to convert the large vendors to accepting a credit card," says Treasury Strategies's Robertson. Your money will continue to earn interest for a few more weeks during the grace period, and you will save on transaction fees (which will be foisted on the vendor). Plus, many card issuers offer a rewards or rebate program.

3. Liquidity
Sweep accounts. In recent years, small-business clients have been given access to these programs, which "sweep" excess funds out of an operating account at the end of each day and invest them overnight in money market funds and the like. And many banks, says Seiwert, will use the swept funds to pay down lines of credit, a valuable feature for businesses that borrow for operations. As always, check to make sure you will earn or save more in interest than you will spend in fees. (See "When Time Beats Money.") And note that sweep accounts may become unnecessary in July 2011, once the recent financial reform legislation takes effect. The new law repeals a Depression-era ban on interest-bearing business checking accounts, and banks could respond by offering interest to business depositors.

Zero-balance accounts. These permit businesses to establish individual accounts that distinguish among types of disbursements or deposits yet still concentrate cash in a single primary account for convenience. You might, for example, want to protect yourself against employee fraud by separating payroll from other disbursements or otherwise segregating accounts to limit employee access. Each subsidiary account has a target balance (often zero), and, at day's end, money from new deposits is automatically transferred to the main account, or money from the main account is transferred to fund debits. Either way, the account returns to the target balance. With zero balancing, you can keep separate records for discrete functions and one eye on total cash -- and excess funds can be swept into an interest-bearing account or used to pay down debt.

When Time Beats Money

Some services marketed to small businesses may not suit yours -- particularly those in which the value lies in limiting check float or maximizing your funds' investment opportunities. Here are two cases in which you will have to calculate whether interest earnings or savings offset the costs.

A lockbox is a bank-managed post office box to which your customers remit checks. The bank collects the mail frequently and then gets the funds quickly into your account. But with improvements in mail delivery and bank communication, "a lockbox only buys one or two days of acceleration," even if it is located near customers in another part of the country, says Brian Hinton, a senior vice president at the Huntington National Bank in Columbus, Ohio. A lockbox can cost $100 a month to maintain plus a per transaction charge. If total costs run $125 a month, and you earn 2 percent annualized interest on that one-day advantage, the lockbox would have to process $2.3 million a month just for you to break even.

Controlled disbursement is an additional service on top of zero balancing that allows just-in-time account transfers to fund payments. Each morning, the bank provides a list of your checks that will clear that day, so that you can transfer into the checking account the exact amount needed to cover them. Theoretically, a business operating on invested funds or a line of credit could benefit from this, but controlled disbursement is expensive: $100 to $150 a month, plus potentially the cost of wire transfers -- so here, too, a lot of principal will have to be in play to justify the expense. In any event, ACH payments, which you schedule, effectively perform the same function.

Pricing Cash Management

Comparing the cash management services offered by banks can be difficult. Start by putting together requests for proposal or quotes. Unless your business is very small, most banks will respond.

Ask around. Start with informal talks with bankers at two or three institutions to mull over which services you ought to consider.

Watch the details. Be sure each bank specifies how its services operate -- for example, cutoff times for deposits and how and when funds become available.

Estimate your needs. Devise a hypothetical, yet realistic, estimate of the number and volume of transactions you will execute for each service, and ask the banks to present prices per transaction. Comparing credit card processors, in particular, requires great specificity, given that card network fees vary by type of card and transaction. And ask for both bundled and à la carte pricing.