Computer Banking: Make More, Work Less
Consider the source. In the May & June edition of its magazine, the American Association of Retired Persons (AARP) listed ways to make more money with your computer. One way is to invest in FDIC-insured online banks that do not have expenses such as branch offices. The added income is substantial. Even “bricks and mortar” banks recognize the benefits of computerized banking as they attempt to save costs by encouraging customers to use online banking services.
In today’s world, nearly all of an association’s internal money management is done by computer. Associations are comfortable with the electronic management of their money. It is hard to imagine an association that would prefer managing its finances using traditional manual methods. Those same associations, however, may not be taking advantage of the benefits of conducting their external business electronically.
Many associations have been reluctant to use online banking services. Those concerns often do not reflect the reality of today’s world. The internal operating systems of the world’s banks are all most entirely electronic. They are designed to interact with customers electronically if those customers chose to do so. Businesses conduct most of their banking online. In light of the benefits, the question is why associations have lagged behind the rest of the world in using online banking. Consider the benefits they are losing:
More Money
Online banks can generally pay a substantially greater return on investments. Associations are always looking for ways to cut costs in order to avoid raising common expenses. They need to spend as much energy on getting the greatest possible return on investments. This is particularly true in Hawaii where associations can hold millions of dollars in reserves. Boards of directors have a fiduciary duty to their associations to invest association assets wisely. In light of the potential for substantially greater returns, boards should consider FDIC-insured online banks in making their investment decisions.
Internet Cash Management
By using internet banking, association’s have greater, and easier, access to basic financial information. Any board member can view the status of accounts online, 24 hours a day, from any computer. They can see scanned copies of cleared checks which will allow them to immediately respond to payment questions. That avoids the days of delay that can occur waiting for a bank to produce copies of cancelled checks. Instead, copies of checks can be printed immediately on computer’s printer.
An association’s treasurer can receive balance alerts by e-mail if association accounts rise above or fall below preset balance amounts. Funds can then be transferred, by computer, to meet the association’s needs.
An association’s bills can be paid online. Envelopes, stamps and trips to the mailbox are no longer necessary, nor do they make sense. Vendors can be paid online and the Association will have all the records of payment that it would with paper checks. Further, with password protection, payment authorization is as secure, or more secure, than writing paper checks.
Greater Security
Electronic banking reduces opportunities for fraud. Paper checks can easily be stolen and altered and it may take days or weeks before anyone realizes what has happened. Online payments can be posted and reviewed immediately. There is also software that can monitor payments and receipts for transactions and notify bookkeepers and treasurers of transactions that appear to be out of the ordinary.
Check 21, Check Imaging
When Congress passed the 21st Century Act, commonly known as Check 21, it radically altered the use of paper checks. Since the inception of the Act in October of 2004, banks have been required to accept digital images of checks in lieu of the original check. The original check is not used at all. This means that bills can be paid as quickly as it takes an e-mail to arrive at its destination.
These are just a few of the benefits of banking online. Electronic banking has significantly altered the world’s banking and finance systems. It is the standard for business banking. It is time for community associations to move into the 21st Century as well.
