Name: Regine Ornopia Vega 1Y1- BSBA MAJOR IN BANKING

Reviewer in Banking and Finance.

Banking Services.
Business Banking Fundamentals
Factors to consider when deciding what banking services you need.
 Checking accounts
 Savings accounts and certificates of deposit
 Account access
Business Banking Fundamentals
Choosing the right bank
 ATM usage and availability
 Customer service and relationship
 Accessibility: drive or walk, parking drive-through
 Products and services
 Fees
 Deposited funds availability
 Automated teller machine
 An ATM is a machine built into the wall of a bank or other building, which allows
people to take out money from their bank account by using a special card. ATM
is an abbreviation for ‘automated teller machine’. An ATM card is any payment
card issued by a financial institution that enables a customer to access an
automated teller machine (ATM) in order to perform transactions such as
deposits cash withdrawals, obtaining account information etc.
 Is ATM card and debit card same?
 The difference is that a debit card has a Visa® or Mastercard® logo on its face,
When you use a debit card allow you to use ATM’s, a safe and convenient way to
manage your money.
Checking accounts
 Small business or commercial checking
 Payroll and operating accounts – “Zero balance” feature (sweeps) and fees
Do not mix business and personal transactions (no” co-mingling”)

 A cheque is a written order by a customer of the bank to the drawee bank (the
bank on which the cheque is drawn) to make a payment to the person/entity
mentioned in it.
  You can withdraw money at the bank by simply writing a cheque to self. Just
keep in mind that you cannot use any bank’s cheque to withdraw cash from
another bank.
The parts of a check

 Name and address. Your name address are preprinted on the check for your
convenience and tell the person or company to whom you’re giving the check
known as the payee that you’re the one who wrote it.
 Date, Pay to the order of, Numeric amount box.
 Numeric amount box
 Written amount
 Bank name
 “For” or memo
 Signature line.

What are the different parts of a cheque?

 Parts of cheque
 Drawee, the financial institution where the cheque can be presented for payment.
 Payee. A person to whom money is paid or is to be paid, especially the person to
whom a check is made payable.
 Date of issue.
 Amount of currency.
 Drawer, the person or entity making the cheque.
 Signature of drawer
 Machine readable routing and account information.

Who is drawer and drawee?

 Drawer. Maker or writer of a bill of exchange (check, draft, letter of credit, etc.)
who directs the drawee (such as a bank) to pay the stated amount to a third party
(the payee).
 In documentary credit, the drawer is the beneficiary of a letter of credit. Also
called writer.
What does documentary credit mean?

 Under documentary credit arrangement (also called letter of credit arrangement)

a bank (usually in the importer’s country) undertakes to pay for a shipment,
provided the exporter submits the required documents (such as a clean bill of
lading, certificate of insurance, certificate of origin) within a specified period.
Letter of credit.

 What is letter of credit with example?

 A letter of credit is a document issued by a third party that guarantees payment
for goods or services when the seller provides acceptable documentation, this
might be done, for example, if the advising bank financed the transaction for the
beneficiary until payment we received.
 A drawer. The drawer is the party who writes or created a draft or check.
 Drawer- the drawer is the party to whom the draft is addressed and who is
ordered to pay the amount of money specified in the draft. The bank is the
drawee on a check, and the credit union is the drawee on a check, and the credit
union is the drawee on a share draft. Again, a drawee on a draft has no
responsibility under the draft until it has accepted that instrument.
 Also remember that once you draw a cheque, it’s valid only for three months. A
cheque presented for collection three months after the date of issue is marked as
‘out -of-date cheque’. So, in case you want to write a post-dated cheque, write
the date only after which it can be enchased
Do Not Mix Business and Your Personal Transactions.
Avoid “co-mingling” to mix an amount of money belonging to one person, business, or
account with that of another when the money should have been kept separate:
Ensure accurate bookkeeping:
 Avoid tax consequences
 Follow a proper protocol to transfer funds (ask your bank for how to generate a
record of activity)
What is commingling of funds?

 The term commingling is most often applied to funds or assets. When a fiduciary,
a person entrusted with the management of funds other than his or her own in
trust, mixes trust money with that of others, the fiduciary is commingling funds
and thereby breaching his or her fiduciary duty.
What is commingled property?

 Commingling is when one spouse’s separate property is mixed with the other
spouse’s marital property. Commingling can happen when a spouse uses marital
funds to improve, maintain, or contribute to separate property. For example, a
house that you individually purchased before your marriage is your separate
property.
Why is commingling illegal in real state?

 Unethical and Illegal Commingling

 Certain acts when dealing with commingled assets for business purposes are
considered to be unethical, and may actually be considered illegal commingling
Withdrawing money from a business bank account for personal expenses without
proper documentation.
 Synonyms – (Fiduciary n.) a person who holds assets in trust for a beneficiary
 Synonyms: executor, somebody, legal guardian, steward, administrator

What is a fiduciary person?

 A fiduciary is a person who holds a legal or ethical relationship of trust with one
or more other parties, person or group persons. Typically, a fiduciary prudently
take care of money or other assets for another person.
What makes some a fiduciary?

 A fiduciary is a person or organization that acts on behalf of another person or

persons to manage assets, The Highest legal duty of one party to another, being
bound ethically to act in the other’s best interests.
What does commingling mean in real estate?

 Commingling problems are found when business/investing funds are mingled, a

with personal funds.. When a fiduciary, a person entrusted with the management
of real estate investing funds other than his or own mixes trust or investment
money with that of others, the fiduciary is “commingling funds” as well.
Addition Banking Services.
 Prevent potential fraud or forgeries
 Record keeping
 Direct deposit
Cash management services.
 Sweep investment account
 Other sweep accounts
 Online funds transfer
 Lockbox service
 Positive pay
What does sweep account mean?
  A sweep account is a bank account that automatically transfers amounts that
exceed, or fall short of, a certain level into a higher interest earning investment
option at the close of each business day. Commonly, the excess cash is swept
into money market funds.
 Lockbox system. July 06, 2019. A lockbox is a bank-operated mailing address to
which company directs its customers to send their payments. The bank opens
the incoming mail, deposit all received funds in the company’s bank account, and
scans the payments and any remittance information.
Business Banking Fundamentals.
Savings accounts and certificates of deposit.
 Saving accounts – Limitations on withdrawals and types of accounts.
 Certificates of deposit – Understanding Certificates of Deposit.
 A certificate of deposit (CD) – is a promissory note issued by a bank. It is a
time deposit that restricts holders from withdrawing funds on demand, Most CDs
offer higher interest rates than those available from savings and money market
accounts.
Business account access.
 Depositing sales with remote deposit scanner
 Online access
 Remote deposit capture (RDC) is a system that allows a customer to scan
checks remotely and transmit the check images to a bank for deposit.
Deposit Insurance In-Depth
Deposit insurance covers businesses that have:
 Sole proprietorships
 Corporations, partnership and unincorporated associations such as not-for-
profits and for-profits
 Fiduciary Accounts – are deposit accounts established by a person or entity for
the benefit of one or more other parties, also known as principals, The individual
or entity opening the account does not have an ownership interest in the deposit.
 A fiduciary – is a person or organization that acts on behalf of another person or
persons to manage assets. Essentially, a fiduciary owes to that other entity the
duties of good faith and trust. The highest legal duty of one party to another,
being a fiduciary requires being bound ethically to act in the other’s best
interests.
 A fiduciary – might be responsible for general well-being, but often the task
involves finances-managing the assets of another person, or of a group of
 people, for example. Money managers, financial advisors, bankers, accountants,
executors, board members, and corporate officers all have fiduciary
responsibility.
 The fiduciary – is expected to manage the assets for the benefit of the other
person, rather than for their own profit, and cannot benefit personally from their
management of assets.
Fiduciary duties appear in a wide variety of common business relationship,
including:

 Trustee and beneficiary (the most common type)

 Corporate board members and shareholders
 Executors and legatees
 Guardians and wards
 Promoters and stock subscribers
 Lawyers and clients
 Investment corporations and investors
 Legatee – A person who receives Personal Property through a will. The term
legatee is often used to denote those who inherit under a will without any
distinction between real property and personal property, but technically, a
devisee inherits real property under a will.
What is the role of the Treasury Department?

 Treasury’s mission highlights its role as the steward of U.S economic and
financial systems, and as an influential participant in the world economy. The
Treasury Department is the executive agency responsible for promoting
economic prosperity and ensuring the financial security of the United States.
What is the treasury function in a finance department?

 The process of administering to the financial assets and holdings of a business.

The goal of most treasury management departments is to optimize their
company’s liquidity, make sound financial investments for the future with any
excess cash, and reduce or enter into hedges against its financial risks.
Why is the Treasury Department important?

 In addition to these fiscal duties, the Treasury is also responsible for managing
the national banking system because the treasury handles the nation’s revenues,
financial assets and debts, the Treasury Secretary is perhaps the single most
important economic adviser to the president.
What is the function of treasury department in banks?

 The treasury department of a bank is responsible for balancing and managing

the daily cash flow and liquidity of funds within the bank. The department also
handles the bank’s investments in securities, foreign exchange and cash
instruments.
What is Treasury back office role?

 A middle Office user is responsible to enforce and review risk limits and
exceptions while a back office function is responsible for settlement, confirmation
and accounting. TROPS or Treasury Operations is generally used to refer to the
treasury back office group.
What is Treasury Important?

 The Treasury function in any corporate has always been important in making
sure that the business has sufficient liquidity to meet its obligations, whilst
managing payments, receipts and financial risks effectively.
What is a Treasury Check for?

 Treasury Check Information System (TCIS) is an application system designed to

support the Bureau of the Fiscal Service (Fiscal Service) originally focused on
U.S. Treasury check aftermath activities.
 What does the National Treasury do?
 The National Treasury is one of the departments of the South African
Government. The Treasury manages national economic policy, prepares the
South African government’s annual budget and manages the government’s
finances.
What is the function of trust?

 A trust is an arrangement that allows a third party, known as a trustee, to hold

assets on behalf of beneficiaries. A trustee is the individual that is given control
over the assets left in the trust; this person’s primary role is to act in the best
interest of the beneficiary.
How do you explain a trust?

 A trust is traditionally used for minimizing estate taxes and can offer other
benefits as part of a well-crafted estate plan. A Trust is a fiduciary arrangement
that allows a third party, or trustee, to hold assets on behalf of a beneficiary or
beneficiaries.
What is a trust in finance?

 A trust is a fiduciary relationship in which one party, known as a trustor, gives

another party, the trustee, the right to hold title to property or assets for the
benefit of a third party, the beneficiary. The beneficiary In finance, a trust can
also be a type of closed-end fund built as a public limited company.
What is a trust agreement?

 A trust agreement is a document that spells out the rules that you want followed
for property held in trust for your beneficiaries. Common objectives for trusts are
to reduce the estate tax liability, to protect property in your estate, and to avoid
probate.
Why is trust so important?

 Trust is important because it is the basis around which all human relationships
revolve. Trust is important because if you don't trust someone then they are not
available. And usually you will know it very early on in any budding relationship.
Essentially trust is loyalty July 18, 2016.

 What are the benefits of having a trust?

 Among the chief advantages of trusts, they let you:

 Put conditions on how and when your assets are distributed after you die;

 Reduce estate and gift taxes;

 Distribute assets to heirs efficiently without the cost, delay and publicity of
probate court.

 Better protect your assets from creditors and law suits;

What is trust in simple words?

 In simplest terms, a trust is a legal agreement between at least three parties: the
trust maker, the trustee, and one or more beneficiaries. The trust maker then
transfers ownership of certain assets to the trust, and the trustee manages those
assets for the benefit of the beneficiary or beneficiaries.
What is an example of trust?

 Trust is confidence in the honesty or integrity of a person or thing. An example of

trust is the belief that someone is being truthful. An example of trust is the hope a
parent has when they let their teenager borrow a car.
What does a trust department do?
  Unit organized within a commercial bank to offer services provided usually by a
trust company such as to manage trust accounts and to act as an executor,
guardian, or trustee. Assets handled by trust department are kept in complete
separation from the bank's other assets.
What is the function of a trust?

 Trusts are a smart way to protect your assets, direct who is to receive them, and
reduce the amount of taxes you need to pay. The grantor sets up the trust. The
trustee is the one given control over the assets. The beneficiary is the individual
or individuals who receive the assets left in the trust.
What are the responsibilities of a trustee?

 Trustee Duties and Liabilities. The trustee manages the trust's assets, a
significant responsibility. The trustee's fiduciary duties include a duty of loyalty, a
duty of prudence, and subsidiary duties. The duty of loyalty requires that the
trustee administer the trust solely in the interest of the beneficiaries.

 What Is A Specific Devisee? A specific devisee is someone who is directly

named in a will as a beneficiary of a particular probate asset, such as a car, a
piece of jewelry or specific dollar amount. For example, "I give $15,000.00 to my
niece, Susan, if she survives me."

 Probate assets are any assets that are owned solely by the decedent. This can
include the following: Real property that is titled solely in the decedent's name or
held as a tenant in common. Personal property, such as jewelry, furniture, and
automobiles. Bank accounts that are solely in the decedent's name.
What is the difference between deceased and decedent?

 A decedent is someone who has died. Decedents are deceased, Decedents

include all dead people, no matter when they died. Someone who died an hour
ago is a decedent as well as someone who died 300 years ago.
Additional Banking Services
Business debit card-a card issued by a bank allowing the holder to transfer money
electronically to another bank account when making a purchase. A debit card is a
payment card that deducts money directly from a consumer's checking account to pay
for a purchase. Debit cards eliminate the need to carry cash or physical checks to make
purchases.
 Owner or others
 Convenience and risk
  A debit card (also known as a bank card or check card) is a plastic card that is
used as a payment method to cash when buying things. It is similar to a credit
card, but unlike a credit card, the money comes directly from the user's bank
account when using a debit card.
What mean by debit?
 A debit is an expense, or an amount of money paid from an account, that results
in the increase of an asset or a decrease in a liability or owner's equity on the
balance sheet.
Additional Banking Services
Merchant processing services - expand capabilities and sales
 Credit cards
 Debit cards
 Gift cards
 Online payments and sales
Discussion Point # 2: Banking Service Needs
See page 16 in your Participant Guide.
Use three columns
1. Column 1: List services you need now
2. Column 2: List anticipated services for the next six months to a year
3. Column 3: List services you plan to get in the next two years, or see as future
needs of the business
4. Assign a date to have each service in place or re-evaluated. How will your
banking services needs change over the next two years?
Business Banking Fundamentals
Reconciling accounts
 Deposit accounts
 Remote deposit scanner
 Interest
 Loans
 What is a remote deposit scanner?
  Remote deposit capture (RDC) is a system that allows a customer to scan
checks remotely and transmit the check images to a bank for deposit, usually via
an encrypted Internet connection. ... Banks typically offer RDC to business
customers rather than to individuals.
Business Banking Fundamentals
Protecting your business from online theft
 Use strong passwords and change frequently
 Ensure computers have latest operating system and anti-virus security updates
 Avoid using public wireless hot spots in areas like airports or cafes for online
banking activity
 Ensure your staff thinks critically about emails and phone calls to identify
suspicious behavior
 Consider establishing a dedicated computer for online banking and cash
management.
Additional Banking Services
Commercial lending
 Financing receivables and purchased inventory
 Lines of credit
 Term loans for fixed assets
Additional Banking Services
Business credit card
 Owner or others
 Convenience and risk
Additional Banking Services
Commercial lending
Small Business Administration Loan Guarantees
Improve Chances Getting a Business Loan
• Develop the five C’s of credit
• Do your homework, ask questions
 • Build long-term relationships with your banker
• Improve your personal credit score
What are the four C's of credit?
• A business's creditworthiness is ultimately determined by what are known as the
“4 C's of Credit” -- character, capacity, capital and conditions -- most of which can
be found explicitly or implicitly in a company's credit report. ... Capacity assesses
the ability of the business to pay its bills, i.e., its cash flow.
Additional Banking Services
Financing
 Comparison shop
 Understand types of financing
Additional Banking Services
Commercial lending
Ask about:
 Loan details, features, terms, etc.
 Loan types
Wealth management and retirement planning
 SIMPLE IRA
 401(k) retirement savings plan
 Simplified Employee Pension (SEP) plan
 ROTH IRA-A Roth IRA is a retirement savings account that allows your money to
grow tax-free. You fund a Roth with after-tax dollars, meaning you've already
paid taxes on the money you put into it. In return for no up-front tax break, your
money grows and grows tax free, and when you withdraw at retirement, you pay
no taxes.
 Health savings plan

A 401(k) is a retirement savings plan sponsored by an employer. It lets workers save

and invest a piece of their paycheck before taxes are taken out. Taxes aren't paid until
the money is withdrawn from the account.
 A 401k plan is a retirement savings vehicle that falls under the category of a
"defined-contribution" retirement plan, as determined by the IRS. ... If your employer
says that it will match 50 percent of your 401k contributions up to the first 6 percent, for
example, that's an example of a defined contribution.
Internal Revenue Service
• The Internal Revenue Service (IRS) is a bureau of the Department of Treasury
that is tasked with the enforcement of income tax laws and oversees the
collection of federal income taxes.
Key Points to Remember
• Choose the right bank for your financial needs.
• Banks offer a wide range of loan and deposit products and services to meet your
needs. Shop around.
• Keep your business and personal accounts separate.
• Take precautions to avoid fraud or other preventable losses.
• Establish a cushion for unexpected expenses, perhaps in a savings account.
• Know your personal credit score. If it is low, take steps to increase it .
• To improve your chances of getting a loan, develop the five C’s of credit.
• Build a strong relationship with a lender before, during, and after the loan
process.
Key Points to Remember, cont.

 Establish a cushion for unexpected expenses, perhaps in a savings account.

 Know your personal credit score. If it is low, take steps to increase it .
 To improve your chances of getting a loan, develop the five C’s of credit.
 Build a strong relationship with a lender before, during, and after the loan
process.