Getting the Most Out of the Small Business Payments Toolkit

Ladies and gentlemen, welcome and thank you for joining today's Web conference, Getting the Most out of the Small Business Payment Toolkit. Please note that all lines will be muted for the duration of the call. You're welcome to submit written questions during the presentation and these will be addressed during Q and A. To submit a question, please select the Participants menu at the top of your screen and opt to send note to all presenters. If you're logged in using the web based application, you use the Notes tab on the right hand side of your screen and address your question to all moderators. With that, I'll turn the call over to Natalie Goriel from the sba. Please go ahead. Hi everyone, my name is Natalie Goriel and I'm the Online Media coordinator for the U.S. small Business Administration. I'd like to welcome you to today's webinar. This webinar is made possible through a partnership with the Federal Reserve bank of Minneapolis. We're excited to work with the Federal Reserve because partnerships like this one allow government organizations to come together in support of the small business community. It also allows us to hold free webinars like this one on a variety of business topics. In just a moment, I'd like to turn it over to Mary Hughes, but before I do that, I want to say a little bit about the sba. We know that as small business owners and entrepreneurs, you need more of two things, time and money. Our mission at the SBA is to provide the nation's 28 million small businesses with the support they need in a world where time and money are both short. We do this through what we call the three Cs. First, SBA provides capital to small businesses in the form of guaranteed loans to start, expand, export, or recover after a disaster. Second, we help small businesses with government contracts, which is a $100 billion market. And finally, SBA provides counseling services, often at no cost. Many of you might be familiar with the SBA Resource Partner Network, including Small Business Development Centers, SCORE Mentors, Women's Business Centers, Veterans Business Centers, and our SBA field offices. I encourage you to visit SBA.gov to learn more about services and events in our Resource Partner Network. So with that, let's go ahead and get started with today's webinar. I'd like to now turn it over to Mary. Thank you, Natalie. I am speaking from Minneapolis, Minnesota, where it is 52 degrees and rainy, so I hope the weather is better where you all are. Thanks for being with us today. Making and receiving payments is a very important function in your small business. But believe me, I fully understand that your priorities are probably on things other than improving payments efficiency and security. I want you to think of this webinar on payments education as the broccoli and kale of your diet to date. It's probably not your favorite thing to eat, but it's beneficial to your health. In our hour together today, I hope to accomplish three objectives. First, this webinar will provide basic information about payments so that you feel better informed about your payment choices and what might be best for your business. Second, if you haven't already downloaded and read the Small Business Payments Toolkit, I hope that you'll go to that link and get the document, read it, and implement the parts that you think are worthwhile for your business. And third, if you currently write a lot of paper checks in your business, I hope to get you thinking about why electronic payment alternatives like automated clearinghouse transactions, credit cards, debit cards, and wire transfers may be better and less risky than paper text and finally, on my opening slide, you'll see that I have a date of August 1st, because that's when this webinar was originally scheduled, but we moved it to today, August 3rd. So thanks again for being here. I work for the Federal Reserve bank, which of course is the Central bank of the United States. Minneapolis is the headquarters for the 9th Federal Reserve District, and we're one of 12 regional banks that are part of the Federal Reserve Banks. My slide here tells you what the four main functions are of the Fed we provide financial services to certain depository institutions and we serve as the bank to the U.S. government, the Treasury. Specifically, we establish and execute U.S. monetary policy. I'm sure you have often seen articles about the Federal Open Market Committee and its work regarding interest rates and such. We supervise and regulate certain financial institutions and we are charged by Congress with maintaining a stable financial system and containing systemic risk within that fourth function. We are very much involved in the US Payment system and have been tasked with fostering the integrity, efficiency and accessibility of U.S. payments and settlement systems in support of financial stability and growth. My department, the Payment Standards and Outreach Group, along with other Federal Reserve Banks, work with a variety of diverse stakeholders in our attempts to improve efficiency, effectiveness and safety of the US Payment system. In particular, the folks in my department do a lot of work with improving efficiency in business to business or what we call B2B payments, and we're very active in various standards, group and programs as we try to achieve that. And I'm giving this webinar today because I was the project manager on the Small Business Payments Toolkit, which is the focus of today's webinar. So we're going to cover five topics today. First, I want to tell you about the toolkit itself. Second, I'm going to review some basic information and education about payment choices that are available to you. Third, I'm going to focus on the benefits of electronic payments. Fourth, I'm going to provide some information on how you can potentially work with your bank to try to improve the payment efficiency and security processes that you follow. And then finally, I am going to cover best practices to avoid losses due to payment fraud. And you'll see that little toolkit icon there, that little image up in the upper left hand corner. I've got a red arrow by it. When that appears on the slide, it will tell you that you can find much more information on the topic in the toolkit itself. And finally, I need to state our disclaimer that the opinions that you will hear from me today are my own and do not represent the Federal Reserve bank of Minneapolis or any of the Federal Reserve Banks. I do want to remind you that the webinar is being recorded. I'm told that the link to the presentation is going to be posted on the Small Business Administration website later. And in addition, if you want to get a copy of the slide deck that you see today, you can send me an email which you'll find my Email address on Slide 46 near the end of so in this section I'm going to enter you to the Small Business Famous Toolkit and give you an overview of what's in it. First of all, it's free and it's simply a 45 page PDF document that you can download at this link. We do not copyright the toolkit on purpose because we want people to be able to change or modify it as they wish. We attempted to write the toolkit in plain language. We keep updating it so that it's topics are current. The version that you can download at that link is the third version. Also, we have made a number of YouTube recordings of webinars and you can get links to those at that page. And we encourage you to share the link to the toolkit and webinars with your employees, trading partners or other colleagues as you see fit. The Toolkit was created by a group of volunteers and there was probably about 25 people on the committee. They represented banks who specialize in serving small businesses. The National Automated Clearinghouse had some payments experts on it. We had representatives from large and small businesses, technology and service providers or vendors if you want to think of them that way. Plus, there were a number of payment specialists from the federal banks who participated in the creation of the Toolkit. The volunteers who created the toolkit all belong to a group called the Business Payments Coalition, which was formerly known as the Remittance Coalition. And the Business Payments Coalition wanted to create the Toolkit in order to educate small businesses and the advisors who served them about the benefits of electronic payments. It's free to join the Business Payments Coalition. Their mission is to work together to solve problems associated with B2B payments and remittance exchanges. And remittance simply means all the details that tell what a payment is for, you know, like the invoice number, deductions that are taken, and so forth. And a major goal of the Business Payments Coalition is to try to promote the use of straight through processing. And what does that mean? Straight through processing is the ability to receive and process financial transactions from start to finish using an electronic system without intervention of any sort. It means that information is easily and quickly transferred between all parties involved. It means that there are fewer delays caused by slow, inaccurate or inefficient communication of payment related data. If you've ever heard of hand free phones, you can think of straight through processing as hands free payments processing. And it's a really important concept because achieving straight through processing is key to improving efficiency in the B2B payments area. This slide tells you what you're going to find in the toolkit, but it's actually just a an excerpt of what's in the toolkit. There's much more in there on the right hand side of the slide. I've reproduced a portion of the table of contents in order to make the toolkit easy to use. The Toolkit's table of Contents is equipped with hyperlinks, so if you hover on the topic, it's going to jump to the section that you want. And we have a lot of information in the Toolkit on payments fraud prevention and we offer a variety of mitigation tips to try to avoid or limit your losses due to payment fraud. And the Small Business Administration has invited us to focus on that in a webinar next week on August 8th that will contain content from the Toolkit on fraud fighting tips. I'll just be touching on it lightly today, but we will go in depth on that next Tuesday. And an interesting thing that we're working on now is we're going to create some mini educational videos on the Toolkit that we plan to post on YouTube and they're going to feature brief specific topics in the toolkit, but kind of give it to you in bite sized portions. I wanted to show this slide Business Continuity Planning to give you an example of one of the articles you'll find in version three of the Toolkit. The Business Continuity Planning article starts by telling you how important it is to take steps and make plans to assure the continuity of your small business in case disaster strikes. They estimate that 25% 1/4 of businesses do not reopen following a major disaster. You can protect your business by identifying risks associated with both natural and manmade disasters and creating a plan for action should in the event a disaster would strike. And by keeping those plans updated and informing all the relevant employees about the plans, you can help ensure the survival of your business. Basically, disaster recovery is the ability to get back to normal operations in the event of a disaster, which can be anything from a storm or a flood that destroys an office to a breach of your sensitive networks or a compromise at the point of sale. Basically, it's just a plan to put the information critical to your business onto new computers and servers. Backing up the data needs to be a priority because what you have backed up is going to determine what you can recover later. It's pretty common to experience a hardware or software failure causing you to lose data, so backing up things regularly is recommended so you don't lose that important data. And the toolkit has an article about this and it contains various resources that tell you where you can go to learn more. Another new tool in the third version of the Toolkit, which I wanted to share with you today, is the new 10 question self assessment Quiz. They all have yes or no answers, and each question refers you back to the section in the toolkit that's going to give you information on that topic. For example, if you look at question number six on that slide here, Question six asks have you considered the need for trading partner agreements that you will want your suppliers or vendors to sign in order to authorize ACH or card payments? So if you wanted to learn more about that topic, it tells you to go to page 19 of the toolkit so you can study the article called Can I pay you by ACH Sample Trading Partner Agreement to start receiving ACH payments? The authors of this article that were all part of that committee I told you about earlier studied various trading partner agreements that they had seen and they came up with this template that they think is pretty typical of the types of agreements you're going to see in the marketplace and the Toolkit has a lot of templates like this because it will give you an idea of the types of things you might be faced with and being asked to sign. But of course they're going to be tailored for the specific business arrangement that you're in. They're just intended as a reference. And the whole point of the self assessment quiz is to try to help you determine how ready you are to rethink your check writing and adopt electronic payments instead. The Toolkit has a very robust resources section because frankly, we couldn't get everything in it that we wanted to. So what we have at the end is a list of links that will take you to additional information on a variety of topics, and we're trying to make it easy for you to find good information on the areas of payments that you're interested in. And in addition to the topics listed here, the Resources section also tells you bank holidays for the current years and it provides contact information on regional payment associations which, as the name would suggest, serve various areas of the country and are excellent sources of information payments and can provide advice to businesses in the areas that they serve. Next, let's turn to payment choices. Now, as a business, you have various options available to you when you're choosing how to make payments and which payment types you're going to accept. Each payment type brings with it distinctive features and has its own pros and cons. So that's what we're going to discuss in in this section of the webinar. Really, every time you have to decide on a payment type, what you ultimately select is going to be based on circumstances surrounding that particular transaction, your own preferences, what your risk tolerance is, plus the capabilities of the accounts receivable and accounts payable systems that you have in place. So this slide tells you what payment types are covered in the toolkit, and the information provided there is intended to help you learn. Key characteristics of each payment type commonly used by businesses will help you understand the strengths and benefits of each one, the weaknesses of each one, and best practices on each payment type, including fraud risks. So in addition to good old cash, which we don't really go into here, the most common types of payments used by businesses will be checks, credit cards, debit cards, automated clearing house, or what I'll sometimes refer to as ACH payments and wire transfers. We include Internet bill pay, the green colored balloon there because this gives businesses a viable way to pay another business. All of these payment types can be used for business, consumer and and government payments. At this point I just wanted to say a Couple things about the Alternative payments Balloon Think of alternative payments as payment initiation methods that exist outside of mainstream legacy payment channels. Most online and mobile innovations that we see today focus on consumers. But business services are gaining traction too, and we cover mobile wallets and online payment choices because those are new ways to access existing payment infrastructure. The toolkit gives examples of PayPal and Square, and we give examples of alternative payment systems that would allow a small business to accept online without having to get a traditional merchant account. And we even have a short article on digital or virtual currency and describe what Bitcoin is. But I'm going to focus really on the other areas in the rest of this section. Before I do that, there are two terms that I'm going to be using today that I'd like to define. A payment, first of all, is a transfer of value from one party, the payer, to another. So when I use the term payer, we're talking about the person or business who is making the payment. And when we use the term payee, we're talking about the person or business receiving the payment. Let's focus on checks. First. A check, A paper check is a negotiable instrument, a document that is written, dated and signed, and it instructs and authorizes the financial institution upon which it is drawn to pay a specific amount from the check signer or payer to the payee, the party receiving the check. A point of fact is that nearly all checks written in the United States clear in one or two days after they reach the paying bank. The only float in the system is the time it takes for the check to reach the payee and be deposited by the payee at their bank. But once it's deposited, that check is going to clear in a day or two. Throughout the United States, research shows that small businesses tend to make a large share of their outgoing payments via check. Some Studies say that 80 to 90% of all small business payments are made via checks. I don't know if that's a statistic that you would agree with in your own business. We see this as a problem because checks are costly, labor intensive, and can expose a business to unnecessary fraud. One recent study we found said that businesses that write a lot of checks say they have problems with late payments and missed discounts. You know that in some cases you get a discount if you pay early. And when you pay by check, sometimes the check doesn't get there in time. Nevertheless, there are some pros or advantages to writing checks which we tell about in the toolkit. First, is that checks are widely accepted. And the second big advantage of checks is that the payer, the check writer, does not need to know the payee's bank routing number and account information. If you look at the check on that slide 14 there, I've got the routing number labeled there. The bank routing number is the first set of numbers on the nicker line on the bottom of the check. It identifies the checkholder's bank and have a unique routing number there. And then the next number over is the account number of the check writer. And those two pieces of information, the routing number and account number, will come into play later when we talk about electronic payments. Some disadvantages drawbacks of checks are that it can involve a lot of high costs to write and receive checks. You think about postage, the purchase price of check stock using toner, the labor of signing, stuffing and mailing. Another disadvantage of checks is that many people handle and see the information on checks. So the check writer is exposing their bank account routing number and their account number and these numbers can be stolen or compromised. Mail can be stolen or copies of the check taken. And this creates the opportunity of fraud against the check writer's account. Also, certainty of receipt is a concern when the check writer wonders if the check arrived at the right location at the right time. Nevertheless, businesses of all sizes rely on checks. And the bar graph on slide 15 there explains why one survey said that a business said they like to use checks because of all the payments that were included in the survey question, checks had the highest acceptance among suppliers. They provide the opportunity to share the most complete remittance information, that they're easiest to integrate with the accounts payable system, and that checks are best for avoiding duplicate payments. Now let's talk about automated clearing Health or ach. Next, ACH transactions are processed in batches instead of as single items and they generally have a one to two day settlement time frame. But there's a new service called Same Day ACH in which an ACH transaction can be initiated, processed, settled and delivered to the recipient on the same business day for an additional fee. That program was started to be introduced in September of last year. The Automated Clearinghouse, or ach, is an electronic payment network that can be used to push funds in terms of an ACH credit or pull funds with an achievement. And I'm going to explain these concepts next. So an ACH debit is an entry that pulls a payment from another account. For example, it could be used by a supplier to pull or debit funds from the buyer's account for a Purchase. As an example, a convenience store may agree to pay its supplier of fresh produce and grocery items via an ACH debit. That is, the convenience store might authorize and allow the supplier to remove funds owed on a designated date from its bank account that they share with that company. ACH direct debit transfers include consumer payments on insurance premiums, mortgage loans, and other sorts of bills. The consumers often authorize someone to take money from his or her account, and it's generally on a recurring basis, instance to pay your home mortgage. So the term ACH debit means that the bank receiving the ACH file is getting a debit to one of its accounts. An ACH transaction, as we said, can also be a credit payment. An ACH credit is an entry originated to make a payment to another account, for example, from a buyer to pay a supplier for a purchase. The buyer's account is debited by the buyer's bank and the buyer's bank sends the payment to the ACH network, which in turn sends it to the receiving bank that then credits the recipient's account. So as an example, the owner of a dry cleaning and laundry establishment may instruct her bookkeeper to pay the solvent and laundry soap supplier's invoice by initiating an ACH credit that takes the funds owed to the soap supplier out of the dry cleaner's bank account, processes it and settles it through the ACH system and then deposits an ACH credit payment into the supplier's bank account. So ACH credit transfers generally include use cases of direct deposit when an employer deposits funds into employees checking accounts to pay them. Other popular ACH credit transfers are vendor payments and tax payments. So then in terms of ACH terminology, an ACH credit means the bank receiving the ACH file gets credits on one or more of its accounts. Because direct deposit of payroll is extremely popular in the United States, we created this slide just to show you how it works step by step. So in the lower left hand corner of that exhibit you see the originator. And that would be the business that wants to pay its employees. They would send a file to their bank, the originating depository financial institution, who would prepare the file and send it on to an ACH processor, which is there are two in the United States. One's run by the Federal Reserve, the other is run by epn. In turn, that goes to the employees bank, which is in ACH parlance is termed the receiving depository financial institution. They process that file and in turn credit the employee with the money in their paycheck. There are Some advantages of using ACH it's inexpensive to send and receive both credit and debit payments once the initial setup is completed. It's efficient to process. There's less labor involved and less handling than with checks. It's very secure. Fraud tends to be low in ach. It's great for batch payments like payroll, and it's very useful for recurring payments for monthly bills like utilities and rent. And it's highly reliable. On the minus side, there are some concerns with ach. If you're going to process an ACH debit, you have the risk that there will be insufficient funds once the the debit order arrives. Suppose an apartment building owner is authorized by a renter to deduct money from the renter's bank account on the 1st of each month to pay the rent. Now obviously, if the renter's bank account is low or non existent, there might be insufficient funds in it to cover the rent payment and the transaction will then be returned. It helps if the apartment building owner is flexible in setting up the withdrawal date for an achievement debit, and in that way they can ensure that it arrives at a time of the month when there's likely that funds will be in the account, for instance on a payday or when a government benefit deposit is made. Other concerns with ACH is that the sender has to know the bank account information of the recipient. They need to know the routing number and the account number. The payee, that is the individual or business being paid, has to sign an authorization form, and this has to be in place before ACH transactions can proceed. And a concern too is that initial setup to become an ACH receiver or sender can be a little challenging, and a small business doing it for the first time may need some help to do this. ACH rules can be a little complex, and the final concern is that sometimes managing returns of ACH can be cumbersome. And it's very important that if you're using ACH that businesses make returns in a timely manner in order to be protected and avoid fraud losses. This slide provides some information on that new service I mentioned, same day ACH that's being rolled out in phases. What I'd like to draw your attention to is that on the first phase was implemented last September with credits only of 25,000 or less. Phase two is coming up, meaning that debits will be added in mid September of this year and then the final phase is mid March of 2018 when the funds will be available at 5 o' clock local time of the receiving financial institution. Same day achievements is useful for a variety of cases. The originator of the same day ACH item has to decide whether it's worthwhile to pay the premium price for same day ach, and this slide gives you some examples of cases. Use cases where it might be worthwhile to pay the fee and process the item with same day ACH to guarantee that the actual item arrives that day. Businesses like ACH for these reasons. They find that when you compare it to other payment types, it costs less. It's great for data accuracy. Many consider it to be the most convenient of the payment types. It is best for fraud protection in the opinion of these surveyed businesses, and they also see it as beneficial for working capital management. Let's focus on wire transfers next. Some people call these electronic funds transfers, but wire transfers is probably a more accurate term. Wire transfers electronically transmit funds intraday, meaning that the payment is initiated and settled on the same business date. And a wire transfer is an unconditional order to pay a certain amount to the beneficiary or payee upon receipt. And funds are irrevocable, meaning that a payer cannot recall a wire. Funds are also available immediately, and wires really only take a few seconds to actually process. Once the order is set up, a wire is sent by your bank to the bank of the party that you're paying. And another important characteristic to be aware of with a wire is that a wire is always a single payment. A wire is sent one at a time. Some pros of wire transfers is that they're highly secure and a very reliable way to pay someone. Payment is generally made the same day, although depending on what country it's going to, an international payment can take a little longer. So be aware of that. Wires are real time, settlement is immediate, there is no risk of return or revocation. A wire transfer is final. And finally, wire is ideal for a time critical payment or a high value important payment where finality is essential. Some disadvantages of wires is that they're expensive. Bank fees can be charged to both the sender of the wire and the receiver of the wire, both the payer and the payee. And it can be costly. And then finally, if you wish to send a wire, you have to know the bank account information of the payee, you have to know the bank routing number, and you have to know their account number. One survey that I found said that nearly 8 out of 10 of the survey respondents found wire transfers best for international payments. And if you think about it, it's because wires are highly secure, they're irrevocable by the payer, they're delivered in near real time and delivery is certain. So that works out well when you have to pay someone in internationally. Let's talk about credit and debit cards next. Credit and debit cards are extremely popular in the U.S. especially among consumers. A credit card allows cardholders to make purchases or get cash advances using a line of credit granted by the bank that issued them the card. A debit card allows the cardholder to make purchases or withdraw cash from their own checking account. A debit card is tied to a checking or savings account and payments are withdrawn directly from those accounts. So some of the key features of cards, the pros of using cards are they're popular with both businesses and consumers. Cards are widely accepted. You do not need to know the payee's bank account or account number to pay them by card. Some credit cards offer rewards or perks to cardholders, which encourages spending. And accepting credit and debit cards can help a small business avoid losing a sale and some say may increase the average sales amount. And we know this to be true especially with younger generations who tend to rely on debit cards specifically in cash instead of the other payment types. There are, however, some concerns involved with cards. First of all, it can be expensive to invest in equipment that will enable you to accept cards. Cards can be costly to accept. There are many complex fees involved. There are fees charged to the cardholder. Some people pay an annual fee. If they don't pay off their balance each month, they're going to be paying interest on the unpaid balance. And there are also fees charged to those accepting credit cards. If you decide to accept cards in your small business, you will be faced with interchange fees and chargeback fees. And the toolkit talks in detail about more of all of these. And then the final payment type that we're going to cover in the webinar is Internet bill pay. And we include it in the toolkit because it gives small businesses a way to pay their bills by asking their bank or another service provider to make the payment on their behalf. And what happens is the bank or service provider in turn is going to write a check or make an ach payment and will pay the bill on behalf of their customer, the bill payer. There are of course non bank providers that offer Internet bill pay services. For example, some businesses offer kind of nifty services where they will give you electronic invoices over the Internet and a business can opt to ask the bill pay service to route those bills for payment and processing, which can really create some efficiencies for a small business that wants to use services like that. I'm going to point out just a couple of the bullets on the Internet bill pay pros and cons slide in terms of advantages. Internet bill pay is nice because it centralizes transactions in one location, so bills are all in one place. And the second thing that's interesting is that electronic invoicing that some providers offer are going to create efficiencies because you can automatically route them for payment. In terms of disadvantages, you can only pay an entity using Internet bill pay if the payee is known to the Internet bill pay system. So you're limited to those entities that are in the system. And another important point is that businesses, unlike consumers, are not protected by reg E. So if a hacker would break into an online account and issue a fraudulent payment, reg E provides no recourse nor limitation of liability to businesses. And then the other point I wanted to discuss is that Internet bill pay in most cases does not offer dual control over payments and thus is vulnerable to employee fraud. As the toolkit explains, it's always a good idea to break up the tasks in bill payment among more than one employee so that you have some checks and balances and that you avoid creating a situation where one person can create, authorize and send a payment on behalf of the business. And in the case of Internet bill pay, dual control might not be present. In the third section of the webinar we want to talk a little bit about the benefits of electronic payments over checks. The points on this slide came from a small business banker who shared his approach with me for how he persuades his small business clients about the benefits of electronic payments. He tells them that using ACH wires and credit or debit cards can help improve their cash flow because in general they lead to more predictable and managed postings of transactions and it allows the payer to take advantage of the discounts in better terms. Excuse me. It also provides a way for the payer to impose requirements on slow paying customers. We're going to talk about that on the next slide. And excuse me, it can offer the payee often will offer the payer an incentive to pay early if an electronic method is used. Here are six challenges that one survey said small businesses identified is a considerable to major problem and I want to point out that electronic payments adoption can help with four of these. It can help with improving forecasting of cash flow. It can help with collecting money owed. It can help with tracking and reporting cash inflows and outflows, and it can help with efficiently processing payroll if a business decides to use direct deposit. So these are common challenges, and electronic payments might be a way to help alleviate some of the problems associated with that. This slide talks about the reasons why businesses say they're switching from checks to electronic payments. First of all, I should note that this is a process that takes time and no one expects to get away stop using checks overnight. But for the most part, the businesses move away from checks because they're seeking more efficient processes, reduced costs, better protection, and they want to facilitate straight through processing. Excuse me. So I'm going to focus on ACH in the next couple slides because once it's set up, ACH is the least expensive payment type to accept and to initiate. And we're talking counting internal costs like labor and IT and external costs like bank fees and card interchange. So the toolkit will walk us through on when it makes sense for a small business to use ACH and what small businesses need to know about ach. In terms of making payments, it makes a lot of sense to use direct deposit, especially if you have more than five employees. It's really efficient if you set up recurring payments such as renting utilities on ACH or to pay taxes. On the incoming side, it's helpful to set up ACH to receive payments. If you're a business that bills your customers monthly. Maybe you have a child care center or for school tuition or fitness clubs. It's a way to get that monthly payment automatically. And then nonprofits that charge dues or fees, or religious organizations that are seeking monthly donations often like to use ACH because it helps guarantee a steady stream of funds. And a really critical reason is that some really big companies specify that they want to make payments to their suppliers via ach. So if a small business decides to accept payments via ach, they can then work with those big customers that prefer to pay electronically. Once you've decided to use ach, you will quickly learn that first time users have to confront and understand various issues. They have to learn about how much it's going to cost, what the fee structure is, and what their options are. They need to justify the cost by determining how many payments they have to go through ach. They will learn that the originating bank that they use wants to limit its risk and will require authorization forms for risk underwriting and security. They may require pre funding of ACH accounts and they may set an exposure limit in order to limit their own risk. There are various workflow and control issues, including securing the payment identity of each payee. And then finally, small businesses might decide they really don't want to originate ACH files in house and they may turn to a bank or an outside vendor to perform this service. And the Toolkit has an excellent article that is must reading in if you're thinking of going to ACH and that you don't want to originate the file yourself, but you're going to hire someone else to do it. We have a nice article that talks about what factors you should consider and how you should evaluate a vendor who wants to create an ACH file on your behalf. In the fourth section, we're going to talk about how you can work with your bank to improve payment efficiency and security. Your banker is a really important partner and a resource who can assist you in improving payments processing. And in addition to that, you may find that your accountant, your attorney, or a Small Business Development center counselor, or one of the resources available through the Small Business Administration are also excellent sources of information on guiding small business decisions. The Toolkit offers these pretty straightforward tips. We tell you that you should be proactive, that your banker probably isn't going to contact you to discuss payment needs, that you would have to reach out to your banker, that you should shop around and it covers what sort of bank you should look for, what services they should provide for small businesses. We say you should seek out experts at your bank and it's probably not going to be your loan officer, it will be someone else that perhaps you don't know yet. And we give advice on preparing for the meeting with your banker. And we talk about what you should bring, such as payrolls, examples of your incoming and upgoing payments, how you're using credit and debit cards, et cetera, and then other points covered in the Working with the Bankers section talk about the importance of seeking out risk mitigation services and fraud prevention tools that you should expect to negotiate fees. You don't necessarily have to pay what's printed on the fee schedule, that your banker can provide excellent guidance on workflows and control issues and finally that the banker can offer best practices for managing the payment identity of each payee. Because if you would adopt electronic payments and therefore you need to know the bank routing number and the bank account number of the party that you wish to pay, it's really important that you safeguard that sensitive information because if you would have a data breach or have an unscrupulous employee who tries to commit payments fraud, you do not want to expose that sensitive data and your bank or Other advisors can tell you how to protect that information. We also say that when you meet with your banker, you might want to find out more about payment types that you're not currently using. Things like are you using should you learn more about online bill pay or remote deposit capture or using ach. And regarding card acceptances, your banker can help you establish a merchant services account. Or in addition or instead of that, you might decide you want to use a device like Square PayPal here or Intuit Gold Payments. These are like those little devices you see that attach to a cell phone and allow you to turn your smartphone into a card acceptance device. And we also have a section in the toolkit that offers good common sense tips on how to avoid accepting fraudulent cards. And there's lots more in the toolkit on that. The fifth and final section is going to briefly touch on best practices to avoid fraud losses. The bottom line is that prudent risk management requires that you use multiple layers to help protect against payment frauds. And the webinar that Amanda dorfy of my department and I are giving on August 8th is going to go a lot more into fraud mitigation tools and offer effective ways that you can use to protect your business assets from losses due to payments fraud. And the sad fact is that all payment types carry the risk of fraud, regardless of which one you use. So fraud schemes can vary a lot, from simple schemes like counterfeit checks to more sophisticated scams such as the account takeovers we read about in the news, where a fraudster gets online banking credentials and sends funds from a business's account illegally. And fraudsters can be employees, customers, or even organized crime rings. And we know that fraud tactics continually evolve and change and they attack the weakest link. So just as you get good systems in place, you'll learn that the fraudsters are coming at you from a different angle. When fraud does occur, businesses can be held responsible for lost funds and liability for payments fraud is governed by laws, regulations and or private contracts. And it's going to vary by payment type. So if you turn to the resources section of the toolkit on page 42, the Federal Reserve bank of Minneapolis publishes a payments fraud liability matrix that basically tells you who's on the hook for what. And then finally there's the practical matter of recovering lost funds. It can be really hard to try to get that money back if it's stolen, and a business might not be successful. So it's clear that preventing fraud in the first place is the best approach. I'm going to focus really briefly on some fraud tools that can help mitigate check fraud. Because we know that a lot of small businesses rely on checks. And some things that you can do are to reconcile your accounts daily that if there's something, if there's an exception, you can address it immediately. And it's always important to make timely returns. And this idea of separating employees duties is critical so that one person can't initiate, authorize and make a payment on behalf of the business. Business there's also common sense measures like simply locking up the paper related to checks, including the checks themselves, deposit slips and canceled checks, shredding documents is important and using tools and services that your bank and other providers offer is smart too. Positive pay services work like this. A business sends its bank a list of checks that the business has issued. The bank then matches the checks received for payment against that list. And that allows the bank to identify fraudulent checks or altered checks and not pay them. They're only going to pay the checks that positively match the business's list. And a post no check restriction simply means that you tell your bank, don't post any checks on a certain account. Other common sense ideas are just to educate and train employees. And lastly, don't write so many checks. The Toolkit has a lot more information on fraud prevention. It's organized by payment type. We want to encourage you to have a conversation with your bank about fraud services that they might offer because some of these services are free or available at very reasonable cost that will pay for themselves. And in the most recent version of the Toolkit, we have a new article called Hot Topics in Payments Fraud that showcases latest threats and attacks that you want to be aware of, such as business email compromise. And again, we'll be talking about much more on fraud fighting tips in the webinar that we're going to hold on Tuesday. So in closing, I want to encourage you to download and read the Toolkit. It's free. You just can visit this link and get a copy of it and I'm hoping that you'll be persuaded to do that. And finally, we welcome any questions or follow up suggestions that you have. If you can think of other things that you think we should add to the Toolkit, send me an email at this address. And I want to thank you for listening today. I hope it was worthwhile and informative. So I'm going to stop there and take a look at questions that came in and answer a couple in the time that we have remaining. The first question I see here is that will you be sending a link to the slides and toolkit. And what I've been told is that the SBA will be posting a recorded version of this webinar, which would include the slides slides on their website at a later time. And then if you're interested in a copy of the slide deck, you can just send me a note at the email address on this slide 46, and I'd be happy to share it with you. And you're welcome to reuse it or share it with people as you see fit. And then someone also asked here when the webinar will be replayed, and I can't answer that exactly. But once the Small Business Administration posts the webinar, I would think you could replay it at will. And I'm not seeing any more questions here. Oh, here's one. Let me see. I see that I have to read this one here. He says he runs a tax preparation business and has been running into issues with not being paid for services, since the payments are expected to be paid when payments are issued from the irs. So what would be a better method of payment? Well, I'm sorry, you kind of have me stumped on that. I'd have to give that some thought. Perhaps you could contact other tax preparers. Perhaps there's an association that would have people that face similar problems and they might have some ideas that would answer that directly. But at this point, I'm afraid I don't have a great answer for you on that one. I think that's all the questions that we have. Russell, should I turn it back to you and you can close out the webinar? Thank you, all of our speakers, for joining us, and thank you to all in the audience. The event is now complete, and you may disconnect.