If your bank serves a rural market, you may look at the businesses around you and wonder whether there are enough large commercial prospects to support a Treasury Management growth strategy. The answer may be to start with the smaller businesses you already know.
A business with $1 million or $2 million in annual sales may have modest transaction volume, but it still needs to collect payments, make payroll, pay vendors, and protect its account from fraud. It may need mobile deposit capture, ACH origination, and Positive Pay just as much as a larger company does. The difference is that it needs those services in a package that fits its size and how it operates.
We have been thinking of this as “TM Junior.” It would be a focused offering for established small businesses, built around a few useful Treasury Management services and a meaningful deposit relationship.
The ideal customer might be a business whose owner is already known to the bank, with a consistent sales history and annual revenue below a threshold that makes sense for your market. This would not be a startup package. It would be for an operating business with a track record, regular cash flow, and a reason to make your bank its primary financial home.
You could pair the deposit account with a modest line of credit, subject to your bank’s normal underwriting and, where appropriate, a personal guarantee. You could also set a minimum average daily collected balance, perhaps $2,500. The specific numbers matter less than the principle: the package should encourage a lasting operating relationship with steady deposits.
What would the business receive? Consider a noninterest checking account with online banking, bill pay, and mobile business banking. Include a practical ACH allowance, such as up to 100 outbound transactions a month for payroll and small vendor payments. Add mobile deposit capture with a reasonable check limit, perhaps 20 deposits a month. Debit cards and purchasing cards could make everyday spending easier while reducing reliance on checks.
We would also make fraud protection part of the package from the beginning. If the business writes checks, Reverse Positive Pay could be a required service rather than an optional feature that gets overlooked. The customer would need to understand its responsibility to review exceptions promptly. That conversation is part of selling the value of the package.
A savings feature could give the owner another reason to keep funds at your bank. For example, the bank might automatically sweep collected balances above twice the checking minimum into a linked savings account with a competitive rate. You could set a daily sweep cap, and the sweep could be the only way to fund that account. The exact rate and rules would need to work for your bank, but the idea is simple: help customers put excess cash to work while keeping their operating relationship in one place.
This offering should be easy for your team to explain, price, onboard, and support. It should also give the banker a natural reason to ask about the customer’s payment habits, fraud concerns, borrowing needs, and plans for growth.
A small business may never need your full Treasury Management menu. It can still become a valuable, long-term relationship with reliable operating deposits. In markets where large commercial opportunities are limited, a well-designed “TM Junior” offering could help you build core deposits one business at a time.
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- Marci and Tim
Recent Blog Postings
How to Measure Treasury Management Success Beyond Balances
It’s easy to measure Treasury Management (TM) success by looking at deposit balances, but that only tells part of the story. A truly effective TM program impacts multiple areas of your bank, from earnings and efficiency to customer satisfaction and retention. Read more on the blog...
The Secret to Growing Core Deposits? A Strong Treasury Management Function
Every community bank wants to grow core deposits, especially in a rising-rate environment where funding costs and competition are both intense. Many institutions look to retail campaigns or CD promotions for short-term results. However, we feel the real, sustainable solution often lies in your Treasury Management (TM) department. Read more on the blog...
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