Many deposit-heavy businesses have no problem getting paid but need help managing the volume, timing, and the movement of money. This includes businesses such as restaurants, contractors, medical practices, and those in the service sector. They often handle frequent deposits and mixed payment types while dealing with tight operating margins. They may receive lots of deposits but find that it’s hard to cover their expenses. They could be asking themselves, “Why am I depositing so much but still tight on cash?”
To resolve these issues, cash-heavy small businesses need the right banking tools to operate more efficiently with fewer interruptions, clearer cash visibility, and systems that support their decision-making. Otherwise, a business can face cash handling costs such as extra administrative time, delayed access to funds, and unpredictable fees. At Peoples Bank, we can help you improve your cash handling, which helps you run your business more efficiently.
What Makes a Business “Deposit-Heavy” in Real Life
As the name suggests, a “deposit-heavy” business handles a large number of deposits in cash or the equivalent, such as credit cards, electronic payments, and checks. This cash flow also makes up a significant portion of its business assets. They tend to be service-oriented businesses such as law firms, healthcare, insurance, real estate, nonprofits, and homeowner associations (HOAs). This also includes retail stores and restaurants.
It’s About Frequency & Workflow, Not Just Dollars
Deposit-heavy businesses often make daily or near-daily bank deposits from multiple payment sources such as cash, checks, and debit or credit cards. There could be high transaction costs tied to these activities.
Where Deposit-Heavy Businesses Feel the Strain
Consider the amount of time your business spends preparing, making, and tracking deposits. The processing time can result in delays between your business getting paid and accessing its funds, with you wondering, “Why does it take days for deposits to show up?” In many cases, fees could be hard to predict and difficult to comprehend.
Why the Right Banking Setup Matters More for Deposit-Heavy Businesses
Many of our new small business customers approach us with a question: “Why does it take days for deposits to show up?” It’s a problem that plagues many small business owners and can make it difficult for them to run their operations. Fortunately, that’s something we can help with!
Faster Access Supports Better Decisions
Getting your deposits handled as quickly as possible can improve your cash positioning and reduce any gaps between payment and availability. This can make it much easier for you to schedule your payroll and expenses on a more predictable basis.
Less Administrative Drag on the Business
The less time your staff spends handling deposits is more time they can be doing other things, thereby increasing your productivity. It can also result in less need for manual reconciliation between your financial records. This can let you keep much clearer records to help with accounting and tax preparation.
Tools That Make High-Deposit Operations Easier
The right small business banking tools can make it easier for you to manage your deposits and payments, keep track of invoices, and generate reports that let you see where you stand today and predict where you’ll be down the road.
Deposit Options That Fit the Business Schedule
Imagine being able to make deposits without disrupting your operations, with the flexibility to make them during peak hours or after hours. This gives you consistency in how your deposits are handled.
Visibility Into Daily Cash Activity
The ability to watch and manage your account activity online lets you know exactly what’s been deposited and when. This allows for easier tracking across all locations or teams and gives your business fewer surprises at the end of each month.
Cash Flow Control for Businesses with Constant Inflows
The right tools can make it easier for you to spot patterns in your deposits so you’re better able to anticipate your cash needs. The U.S. Chamber of Commerce reports that cash flow problems are the number one reason why small businesses fail, so getting a firm grip on your cash flow won’t just improve your profitability; it can also help your business survive.
Turning High Deposit Volume into Predictability
This allows for smoother planning for your business expenses and growth. It also reduces stress during lean periods and busy seasons when you have a good idea of how much you might need to keep in reserve and when you can best afford something, such as a major purchase for your business.
Planning for Peaks Without Penalizing Slow Periods
For some small business owners, it can be easy to overreact to temporary revenue spikes and momentary declines. At the very least, it creates undue stress for you and your employees. Through better management of your seasonal swings and cash flow, you can keep your operations steady year-round.
Businesses That Benefit Most from Deposit-Focused Banking
The small business world is full of many types of businesses that could benefit from better handling of their deposits. If they handle a great deal of deposits and have more cash than other assets, working with a deposit-focused bank can save them a great deal of time, money, and stress. These include:
- Law firms may handle customer funds such as managing trusts, dealing with mergers and acquisitions, handling settlements, and court-ordered payments.
- Retail and grocery stores do a great deal of their business in cash or its equivalent, such as credit card and debit card payments.
- Title companies handle large amounts of cash flow as they hold people’s deposits in escrow during real estate transfers.
- Online retailers accept a great deal of payments, and small online businesses typically have lower overhead than retail stores do.
- Restaurants and hospitality businesses such as food and beverages (restaurants, caterers, bars), and accommodations (hotels, resorts, and short-term rentals), must deal with seasonal cash fluctuations while paying their employees and vendors on time.
- Homeowners associations (HOAs) must collect membership fees to cover their operational costs and capital improvements. The right cash management system can make this process much easier to handle, saving time and money for the HOA.
- Medical services such as dentists, specialty doctors, and veterinarians may have delays while waiting for insurance and/or patients to pay their bills. Keeping track of all this paperwork takes time, even when done electronically, which cash management can help with.
- Nonprofits frequently deal with cyclical periods of higher contributions, such as the end of the year, when people are looking to prepare themselves for tax season. They also face seasonal changes in demand for their services. Cash management can help a nonprofit better predict these seasonal flows, which makes it easier for them to meet their goals.
- Accounting firms don’t just help other businesses manage their cash flow; they also have to deal with it themselves. This can be especially difficult for those who offer payroll or trust management services. The right cash management tools can help a firm save time and resources that they could put to better use running their business.
- Contractors are often paid on a draw schedule based on completing each phase of a project. They also have to buy materials, rent equipment, and pay subcontractors. Managing all of this can be difficult, and unforeseen delays add an extra layer of cost and complexity. The right cash management for contractors can help them save time, reduce interruptions, and make it less likely they’ll have to rely on loans to cover any shortfalls.
What Deposit-Heavy Businesses Should Look for in a Banking Partner
When looking for a banking partner, we recommend the following considerations:
- Clear, understandable pricing to eliminate any surprises.
- Tools should match how your business actually operates, with the flexibility to adapt to your needs.
- Consistent access to support when questions come up, such as a local banker who can help you solve any problems.
- Fewer workarounds and fewer surprises. The tools you receive should work as intended, without any complicated tweaks, tips, or stopgaps.
Deposit-heavy small businesses don’t need more complexity to manage their funds; they need banking that can keep up with them and meet their needs. The right setup supports smoother operations, better cash awareness, and fewer distractions, so owners can focus on running and growing their business.
Review Your Deposit Setup with a Business Banking Specialist
If you’d like to learn more about improving your daily operations, please reach out to one of our bankers by contacting us or visiting one of our locations in Iowa, Minnesota, and South Dakota.