Nonprofit Cash Flow Management

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Virginia National Bank\’s Treasury Management department delivered this presentation to members of the Center For Nonprofit Excellence at today\’s workshop.

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  • Focus on non-profit benefits: eliminate photocopyin; eliminate detailed deposit tickets; improve donor mail data base via check images w/adddresses; separate staff/volunteer duties such as tax confirmations, donor record posting, bank deposits, email confirmations
  • FOCUS ON DIRECT DEPOSITS - - IS A LOW COST WAY TO PAY EMPLOYEES AND HAVE BENEFIT OF PAYING PAYROLL TAXES!
  • Who do you give paper checks to – vendors, beneficiaries, employees, temps, etc? How well do you trust all of them? You’re giving them your account data – bank routing number, your account number, serial number range, deposit balance indicator…… Check alteration risk. ACH debit process – preauthorized or not? MUST BE LACK OF AUTH – changing your mind doesn’t count.
  • Monthly Op – discuss monthly distributions – Payroll, recurring expenses. Forecast funds – buckets for when money will be spent This year vs. Next – MMAs & Investment sweeps were once a good business tool – what is right now?
  • Nonprofit Cash Flow Management

    1. 2. Nonprofit Cash Flow Management June 28, 2011
    2. 3. Virginia National Bank Treasury Management Team <ul><li>Steve Krohn – EVP and Managing Director </li></ul><ul><li>Ginger Germani – TM Officer </li></ul><ul><li>Carrie Gillispie – TM Representative </li></ul><ul><li>Brooke Jenkins – Merchant Card Representative </li></ul>
    3. 4. What Can Cash Flow Management Do for You? <ul><li>Now that you have this information, how do you make it more valuable day to day for your organization? </li></ul><ul><ul><li>Goals </li></ul></ul><ul><ul><li>Tools </li></ul></ul><ul><ul><li>Obstacles/Barriers </li></ul></ul>
    4. 5. Banking Tools to Save Time, Lower Costs & Increase Efficiency
    5. 6. Banking Tools to Save Time & Increase Efficiency <ul><li>Business Online </li></ul><ul><li>Deposit Online </li></ul><ul><li>ACH Transactions </li></ul>
    6. 7. Business Online <ul><li>Business Online allows you to: </li></ul><ul><li>View account balances and transaction details </li></ul><ul><li>See current day deposit information </li></ul><ul><li>Schedule future and recurring transfers between accounts </li></ul><ul><li>Initiate direct deposit of payroll </li></ul>
    7. 8. Deposit Online – (Carrie) <ul><li>Deposit Online enables you to: </li></ul><ul><li>Save staff time by eliminating unnecessary trips to deposit checks </li></ul><ul><li>Speed up your access to funds through timely, daily deposits </li></ul><ul><li>Create your own check images and data </li></ul>
    8. 9. Deposit Online
    9. 10. ACH Transactions <ul><li>ACH Payments are simply electronic transfers to or from one account and another account, even at another bank. </li></ul><ul><li>Common uses are: </li></ul><ul><li>A donor makes regular, recurring contributions on a monthly or quarterly basis </li></ul><ul><li>A customer pays service provider, such as utilities or rent </li></ul><ul><li>Employer direct deposits payroll to employees </li></ul><ul><li>Business pays supplier for products </li></ul>
    10. 11. ACH Transactions
    11. 12. ACH Transactions
    12. 13. Reducing Online Banking and Transaction Fraud Risks
    13. 14. Reducing Online Fraud Risk <ul><li>Dedicated “banking” computer </li></ul><ul><li>Online authentication tools (i.e. tokens) </li></ul><ul><li>Dual approval to move funds </li></ul><ul><li>System level & User level transaction limits and service entitlements </li></ul>
    14. 15. Reducing Online Fraud Risk
    15. 16. Reducing Transaction Fraud Risks <ul><li>Required 48 hour bank notification </li></ul><ul><li>Check Positive Pay </li></ul><ul><li>Positive Pay Payee Verification </li></ul><ul><li>ACH Positive Pay </li></ul>
    16. 17. Transaction Fraud Statistics <ul><li>Association for Finance Professionals (“AFP”) </li></ul><ul><li>2011 Payments Fraud and Control Survey </li></ul><ul><li>http:// www.afponline.org/pub/res/topics/topics_pay.html </li></ul><ul><li>Underwritten by J.P. Morgan and available generally from AFP at no charge once you’re a registered website user. </li></ul>
    17. 18. Transaction Fraud Statistics
    18. 19. Transaction Fraud Statistics
    19. 20. Merchant Processing Technology
    20. 21. Merchant Processing Technology <ul><li>Customization Capabilities </li></ul><ul><li>Online Capabilities </li></ul><ul><li>On-Site Event Capabilities </li></ul>
    21. 22. Merchant Processing Technology
    22. 23. Merchant Processing Technology
    23. 24. Merchant Processing Technology
    24. 25. Cash Planning
    25. 26. Cash Planning <ul><li>Understanding the FDIC limits </li></ul><ul><li>CDARS </li></ul><ul><li>Know Your Cash Flow </li></ul><ul><li>Layering </li></ul><ul><li>Laddering </li></ul>
    26. 27. FDIC Limits <ul><li>The FDIC insures up to $250,000 per entity in any one FDIC insured institution. </li></ul><ul><li>Currently (June 28 th , 2011) the FDIC provides unlimited coverage on deposits in non-interest bearing accounts. </li></ul><ul><li>The FDIC no longer offers unlimited coverage on interest bearing accounts, as it did from 2008-2010. </li></ul>
    27. 28. CDARS <ul><li>CDARS (Certificate of Deposit Account Registry Service). </li></ul><ul><li>Insures CDs up to $50,000,000. </li></ul><ul><li>Provides higher rate than Treasuries. </li></ul><ul><li>Approved for use by municipalities in 2007. </li></ul><ul><li>One monthly statement, one 1099 for tax reporting. </li></ul><ul><li>Less time spent tracking CDs spread all over town. </li></ul>
    28. 29. Know Your Cash Flow <ul><li>Monthly operating cash. </li></ul><ul><li>Forecast funds based on business cycles, campaigns & large expenditures. </li></ul><ul><li>What works this year will not always be the case next year. </li></ul><ul><li>Is your current account structure manageable and is it making your organization the most money? </li></ul>
    29. 30. Layering Funds <ul><li>What types of accounts do you use and what benefit are you deriving from them? </li></ul><ul><li>Use of multiple accounts can help you achieve greater interest earnings and is easy. </li></ul>
    30. 31. Layering Funds <ul><li>Single Account Structure </li></ul><ul><li>Interest Checking       $75,000      0.20%      = $150 annually, or 0.20% </li></ul><ul><li>________________________________________________________ </li></ul><ul><li>Layered Accounts </li></ul><ul><li>Interest Checking            $10,000      0.20% </li></ul><ul><li>Phoenix (3 year rate)        $15,000      0.45% </li></ul><ul><li>Funds Management CD    $50,000      1.05%      = $600+ annually, or 0.82% with funds rolling every 30 days to 6 months and with even more on the line as rates increase </li></ul>
    31. 32. Laddering Funds <ul><li>Finding comfortable and rewarding maturities. </li></ul><ul><li>Flexibility vs. Profit. What do you need and on what horizon? </li></ul><ul><li>CDARS can be an excellent way to handle endowments. </li></ul>
    32. 33. TM Contact Information <ul><li>Steve Krohn – EVP and Managing Director TM & Private Banking </li></ul><ul><ul><li>[email_address] or 817-8648 or cell 987-4600 </li></ul></ul><ul><li>Ginger Germani – TM Officer </li></ul><ul><ul><li>[email_address] or 817-8622 or cell 987-6198 </li></ul></ul><ul><li>Carrie Gillispie – TM Representative </li></ul><ul><ul><li>[email_address] or 817-8655 or cell 906-9290 </li></ul></ul><ul><li>Brooke Jenkins – Merchant Card Representative </li></ul><ul><ul><li>[email_address] or 817-8650 or cell 987-6202 </li></ul></ul>
    33. 34. Thank you

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