Deposit Statement Analysis

Every month businesses receive an analysis statement from each of their banks detailing their deposit account service use. These billing statements contain a wealth of information about your bank accounts and cash management operation – they are a resource that should not go underutilized.

To keep this relatively simple for attention span sake we’ll just mention a few easy steps you can take in passing time to better understand your charges and discovering possible revenue from costs you may not even know you’re either paying or a cost that could be cut.

Cost Control
Let’s start with your calculated “ECR” or Earnings Credit Rate. This really needs to be comp’d out to discover your true cost of savings throughout the year. This marginal rate could be costing you thousands throughout the cost of the year.

A superior rate would be around the neighborhood of 1.5. This rate will do more than cover your fees and expenses for the services your business is utilizing; i.e. cash management tools, remote deposit, lockbox, check frequency, ACH services, Wires, Courier Service etc.

Reserve Reduction
Next let’s cover your Reserve Reduction. This is where your depositing institution is applying and calculating your ECR. Some are based off of average deposit balances and some are based off of collected balances. The bank may be applying only a portion of your balances to your ECR while receiving interest from the Fed on all it’s reserves. Reserve requirement’s should be around .1 of your investable balance (balance remaining after float). You could be doing much more with idle cash.

FDIC Coverage
Some banks will require a fee for FDIC coverage. I would suggest reaching out to an institution that doesn’t charge.

Case Management and Service
Finally, the whole reason you’ve probably decided on a deposit partner. Everyone is human so mistakes are always going to happen. The real test is how the problem is resolved and what is done in the future to ensure it doesn’t happen again. Just because your relationship with your existing institution is cemented through networked account numbers, ACH transfers, direct deposits, check floats, payroll, merchants and discounted credit lines doesn’t mean you can’t consider alternatives. Use this for what it is. A simple concise idea to squeeze out a little more from your existing operations.

Insanity: Doing the same thing over and over again and expecting different results.