By overcoming objections to Positive Pay services, you create a win-win solution for both your customers and your institution. Positive Pay is one of the most valuable Treasury Management solutions your institution offers to businesses to prevent fraud. However, for some Treasury Management Officers (TMOs), it’s the hardest service to sell. Why? Because typically, business customers have five key objections to paying for this valuable service.

The best opportunity to sell Positive Pay to your new business customers is during the prospecting process. Both business bankers and TMOs must understand how this service works and who’s liable if the customer experiences fraud. In this blog, we discuss what the top five objections are and how you, as a salesperson, can overcome those objections.

Customers don’t think that fraud will ever happen to them…until it does.

Just like other accidents, tragedies, or natural disasters, people don’t think it can happen to them… until it does. Experiencing fraud in your accounts – whether personal or business – can feel like the world is ending. It is a horrible experience to live through and it can take even years to recover. Therefore, you need to learn about real life situations where others experienced fraud so you can share with your business customers. The idea is not to instill fear in them but to create awareness.

True Story: A business owner pre-signed checks and left them with the bookkeeper. One day, the business owner had an emergency and called the bookkeeper to pay a specific bill. The bookkeeper was on vacation, so she called her assistant to find the pre-signed checks in her desk drawer. She gave specific instructions to pay the bills, and the assistant did a great job. She paid the bill on time and the crisis was averted. However, she also proceeded to write a check for $3,500 to herself and cashed it. The next week when the business owner discovered that the money was gone from the account, he called the bank. In this instance, the bank was not liable because the customer signed a legitimate check. The customer was out the $3,500. With Positive Pay for checks, he would have found out the very next day and would have stopped the check from being cashed. These are the stories you need to share with customers to encourage them to sign up.

Too expensive.

The next objection is that Positive Pay is too expensive. A monthly fee of $25 to $45 is not expensive compared to the alternative of losing thousands of dollars. In contrast, Positive Pay is one of the most expensive services that institutions pay for. In addition to paying the providers, institutions also have the staff expenses. This is an expensive service to provide for your business customers and you should get paid for it. However, many institutions offer this important and valuable service for free. They claim that the expense of fraud is way higher than the expense to absorb the cost of Positive Pay. While that may be true in some cases, I disagree that it should be given away to customers. It is like a patient needing an MRI telling the doctors that they don’t want to pay for this service because it’s inconvenient and too expensive. Why should doctors give away MRI services when they invest millions of dollars on machinery plus the skilled staff? They shouldn’t and we all know they don’t. We all pay for our own MRI tests when needed.

Business customers need a tool to identify, prevent, and avoid fraud in their accounts. This takes the investment of time and money on their part. Your institution offers this amazing tool plus staff who train them and guide them through the process.

Customers don’t want to spend time uploading the checks issued batch files.

As mentioned above, it takes an effort from both the customers and the institutions to prevent and avoid fraud. If they are not willing to upload the batch of checks or ACH to ensure the institution only pays the authorized payments, then they should be responsible for fraudulent transactions. Many institutions are now requiring customers to sign a “Hold Harmless” or “Waiver” for those who refuse to use the Positive Pay services. When offered with this option from the start, most often they will agree to sign up.

They don’t like to be tied down to approve exceptions by the deadline.

Daily, the system matches the cleared items to the ones sent by the customer. All the “unmatched items” must be reviewed by the customer by a certain time in the morning. The institution does not pay these items unless the customer authorizes them to do so. Business customers need to spend time to approve or reject the checks or ACH transactions that clear daily. Although systems can override the payment authorization, this is unwise and defeats the whole purpose of the service. If customers set the system default to “pay all items without approval,” then they should hold the institution harmless.

Misconception that the bank will be liable for fraudulent checks or ACH transactions.

As shared in the above story, the customer was fully liable for the $3,500 check that was cashed fraudulently. Even then, the business banker wanted to “meet the customer half-way” and have the bank share the customer’s losses. Leadership denied the banker’s suggestion. Although, in this particular case, the customer actually signed a legitimate check, it could have been prevented. In most cases, customers experience true fraud, and it can be avoided by utilizing this Treasury Management service.

The key is education. Institutions must educate business bankers, their customers, and TMOs about Positive Pay. The entire team that services business customers must be knowledgeable about TM services and specifically on Positive Pay. Overcoming objections to Positive Pay services is challenging and it takes time but it’s worth it. The team approach is what will save thousands of dollars to institutions who are serious about preventing fraud and helping their business customers.

Need help with your Institution’s Treasury Management services? Let us know. We’re here to help.

Looking for resources to train your staff on Treasury Management? Our training system, TMClarity, solves your Treasury Management training needs.

As we work with our consulting clients, a challenge they frequently face is how to present their treasury management services pricing. There are several key components of effective Treasury Management Fee Schedules and today, we’re going to visit a way to present your fee schedules to your business customers.

The Fee Schedule is a document that Treasury Management and Business Banking Officers use to disclose service pricing in a consistent manner. Additionally, it can help your team with the negotiation process with larger business customers over recurring fees. The Fee Schedule should not be a secret, but please do not post it on your website – your competitors will use it against you. It should list all TM services your institution offers in addition to regular “banking services” fees. The goal is to establish a clear understanding of your fee structure and incentivizes your business customers to offset those fees with their Earnings Credit Allowance.

What is the Earnings Credit Allowance?

To explain what the Earnings Credit Allowance is, let’s first describe what the Account Analysis System is and why it’s important to have this system implemented correctly. The Account Analysis System is your “billing system.” Your TM business customers should receive an itemized monthly statement listing all their service charges. This Account Analysis Statement should also show the customers their average collected balances and the Earnings Credit Allowance.

To make the billing system work, you set an Earnings Credit Rate that is applied to the customers’ average collected balances minus the reserve requirement. This is called the “investable balance.” This formula results in the Earnings Credit Allowance that customers can use to offset their service charges.

What is the Treasury Management Fee Schedule?

The TM Fee Schedule is different than the business analyzed checking account activity fee schedule. The goal is to differentiate the account maintenance and activity fees from the TM services fees. It is also important to list only the “Analyzed” business checking account fees. You may have a brochure listing all the business checking and savings account types. However, it’s clearer for customers to see fees just for the business analyzed checking account that produces the Account Analysis Statement.

Key Components of Effective Treasury Management Fee Schedules

It’s a best practice to have one Fee Schedule document with two sections. The first section describes the account maintenance and activity fees. The second section contains the itemized list of TM services fees. We’ve typically seen these two schedules combined into a single document, with Business Analyzed Account Maintenance and Activity Fees on one side and Treasury Management Service Fees on the other.

Again, do not post this document on your public website, but make it freely available to your banking staff and customers.

Section 1: Business Analyzed Checking Account Fees. The name of the actual account varies based on what your institution chooses to call it.

• Column 1: Type of service. In this section, you describe the types of services you offer for this checking account which includes maintenance fee. Examples are transaction fees, business online banking, paper statement fee, physical security token, stop payments, return items, coin/currency orders, etc.
• Column 2: Description of service. Enter the type of service detail. For example, for transactions, enter if it’s a debit or credit transactions, on-us or non-on-us checks, or foreign checks.
• Column 3: Fee. Enter the fee you charge for the service.
• Column 4: Charge/Frequency. Enter how often you charge for this item. For example: the fee for each debit transaction is $.15 and it’s charged “per transaction.” The account maintenance is charged “monthly.”

Section 2: Treasury Management Services Fees.

• Column 1: TM Service Name. Example: ACH Origination, Remote Deposit Capture, Wire Transfers, Check & ACH Positive Pay, etc.
• Column 2: Description of the type of fee. Example: Maintenance, ACH debits, ACH credits, Incoming or Outgoing Domestic Wire, etc.
• Column 3: Example: $35.00 (enter the fee for each service and transaction)
• Column 4: Charge/Frequency. Example: Monthly, per transaction, per item, per batch, etc.

The goal of offering a combined Account Maintenance and Transaction Fee Schedule with the Treasury Management Fee Schedule is clarity. Transparency is also key so customers can corelate the service charges from the Fee Schedule to the Account Analysis Statement.

We hope these examples and best practices of key components of effective Treasury Management Fee Schedules help you develop yours.

As always, we’re here to help.