5 Easy, Low Tech Ways to Protect Against Cyber Fraud

By: Mike Watson, VP of Treasury Management

We as a bank have been seeing more fraud attempts in the last few months than we have seen for the last few years. Inspired by an article in the Boston Globe, the article below focuses on some very easy, low- and no-cost ways to reduce cyber fraud. The information in bold is taken directly from the original article.

  1. Establish a clean desk policy.

Banks and other regulated financial institutions are required to implement a policy that specifies how employees should leave their working space when they depart [the] office.

This is a very simple and effective way to be sure that no one can get sensitive information about your company, employees, vendors, or clients. Repairmen, cleaning crews, customers, and other employees may have access to your office during the day and after hours. If the information is left out, it can be stolen. It only takes a second to snap a picture of a document on a desk. I would go a step further and require any sensitive information be put in a locked drawer or cabinet.

  1. Reconcile or check balances every day.

Most companies still reconcile their accounts every 30 days, a practice that has been in place for decades. But in the 21st century, accounts could and should be reconciled every day to make sure no suspicious transactions have occurred.

As a bank, we highly recommend this practice. In order to catch fraud in a timely manner, you have to be in touch with your account activity. Positive Pay and ACH Filter are two products that can help you reconcile and prevent fraud. Please contact me or take a look at our website for more information.

  1. Segregate financial duties.

Segregation of duties is critical to effective internal controls because it reduces the risk of both erroneous and inappropriate actions. In general, the approval function, the accounting/reconciling function, and the asset custody function should be separated among employees. When these functions cannot be separated, a detailed supervisory review of related activities is required as a compensating control activity. Segregation of duties is a deterrent to fraud because it requires collusion with another person to perpetrate a fraudulent act.

Segregation of duties is highly recommended when it comes to establishing your business’ policies and procedures. You can also go a step further and segregate bank accounts by transaction types like Merchant Services and Payroll. By only having one type of transaction come through, like Merchant Services, it is easy to watch for fraud and reconcile with your Merchant Statement.

  1. Establish vendor policies.

Require due diligence of all vendors and customers to verify how they treat financial information and how they handle checks.

We have seen a lot of fraud come through stolen checks that are delivered to unlocked mailboxes. We live in a community where not every business has a locked mailbox. Fraudsters will take the checks, bleach them, and cash them. If you have vendors and customers that do not have secure mailboxes, Positive Pay is a way to protect yourself.

  1. Verify all requests to transfer funds.

All email requests to transfer funds, especially urgent requests, should be confirmed via a phone call or in-person meeting.

This is very important. Fraudsters have become very proficient at spoofing emails. If you have a request by email, verify it with a phone call or perhaps even face-to-face. It is a policy of State Bank of Cross Plains that if we get a request by email, we must verify it by a call.

Fraudsters are making our business lives more difficult than it used to be. These easy-to-implement policies and procedures can make your business more secure. If you have any questions, please reach out. I am here to help.

For more information about fraud prevention and protection, visit our website or call (855) 256-7328.

Member FDIC.

Planning for SUCCESS(ion)

By Alyssa J. Skoyen, J.D., VP & Personal Trust Officer

You’ve put endless hours into ensuring your business is successful. You’ve carefully cultivated its growth and profitability every step of the way, and it has flourished under your leadership.

But, what will happen to your business when you or others step down from leadership roles?

What is succession planning? 

Investopedia defines succession planning as “a strategy for passing each key leadership role within a company to someone else in such a way that the company continues to operate after the incumbent leader is no longer in control” and “ensures that businesses continue to run smoothly.” At the heart of succession planning is replacement planning:

  • Evaluating the skills of current leadership
  • Determining the availability of internal or external successors
  • Purposefully developing the skills of any internal candidates

Why does succession planning matter?

Succession planning is sometimes referred to as “continuation planning” for its vital role in ensuring that businesses continue to exist despite a transition in management or ownership.  More than just planning for who will inherit key roles, succession plans:

  • Provide a medium for businesses to detail how they will minimize potential tax liability
  • Maintain the value of company stock and assets
  • Ensure lending covenants remain fulfilled during a transition

Succession plans are also a useful vehicle for contemplating how to preserve adequate liquidity and cash flow despite the potential need for “stay bonuses” to retain top employees and, in the case of a CEO who was taking a small draw, substantially higher expenses to replace the principal.

Similar to business plans, a succession plan is a means to an end, not an end in itself. The true strength of a succession plan lies in its implementation.

What can go wrong without a plan?

Short answer: everything. Without a succession plan, the business is put at risk as its stakeholders scramble to hold the pieces together through a series of desperate, rushed decisions. In the oft-quoted words of Sir Winston Churchill, “He who fails to plan is planning to fail.”

I need a succession plan… Now what?

Congratulations!  You’ve taken the first step in ensuring the longevity of your business’ success. The succession planning process will no doubt vary depending on the size and structure of your business, but key starting blocks are:

  1. Involving your business’ stakeholders
  2. Assessing availability of internal and external candidates
  3. Pulling together a team of professional advisors including your attorney, CPA, and others to assist in planning and implementation

If you would like more information about getting started with succession planning, contact me directly at (608) 826-3505 or alyssa.skoyen@crossplainsbank.com

Investment Products:
Are Not FDIC Insured | Are Not Bank Guaranteed | May Lose Value

DEBT is not just a four-letter word

Close-up of couple doing finances at home

By Alan Langeteig, SVP – Chief Lending Officer

To paraphrase Shakespeare: “To borrow or not to borrow? That is the question.”

Many people believe that debt of any kind is worse than no debt, but there may be very good reasons to incur short-term debt for long-term gain. There are situations when taking on debt can be a positive and strategic move for your business. In other words, the value of debt is determined by the return provided by that debt.

Without a doubt, a well-run business needs to control expenses in order to maximize profits. Interest expense is similar to every other expense in many ways. One major difference, however, is that while most expenses pay for regular overhead that is consumed in the normal course of business (salaries, rent, utilities, supplies, etc.), interest expense can represent an investment in the future.

For example:

  • Debt can be better than losing an opportunity. When your company has the opportunity to take on a large or unusual job from a new or existing client, debt may make sense. If there are upfront costs, such as hiring labor, purchasing inventory, or upgrading equipment in order to complete and deliver on the job, debt can help make that happen. Loan proceeds are used to fund the upfront costs. The debt is then repaid when the payment is received. Do the math, and make sure there is true profit at the end of the process. Don’t forget to include overhead beyond the upfront costs when calculating the profit.
  • Debt is often more desirable than giving up equity. While offering equity may seem like a simple solution to the growing needs of a small business, it means giving up a percentage of your business and, therefore, future profits that are a result of your hard work…forever. Debt can be repaid quickly when compared to equity, which can be permanent.
  • Debt can add stability to seasonal cash flow. A lot of successful companies are seasonal in their business and, as a result, seasonal in their cash flow. Debt can help even out the cash flow cycle, providing cash during the lean months while being repaid during the flush months.
  • Debt forces discipline and frugality. Having to make regular loan payments on debt helps keep you focused on cash flow. Without having those payments, an influx of cash might tempt a business to spend money on things beyond necessities. Lean businesses tend to keep on top of expenditures.
  • Debt may reduce your taxable income. While I’ve never understood the idea of paying the bank $1.00 in interest to save $.25 in taxes, interest is generally tax-deductible. So while I don’t think tax savings is a reason to take on debt, I do believe it is a nice benefit if a loan is already under consideration. The tax deduction is a potential benefit for all of the previously mentioned scenarios beyond the benefits mentioned in each situation.

Remember, when it comes to taking on debt, all loans are not equal. It’s important that you find a lender who understands your business, understands the reasons for the loan, is willing to lend you money at a reasonable rate, and can provide you fast, convenient, and personal service.

If you have questions, we can help. Contact us today.

Member FDIC.

Buy a Business from a Baby Boomer!

Family business

By: Visar Salihu, Business Banker

According to the California Association of Business Brokers, Baby Boomers are on the verge of selling almost 12 million businesses over the next 10 to 15 years. This obviously represents a significant opportunity for Gen X and Millennial’s with entrepreneurial aspirations of their own.

The best opportunities may lie with businesses that are ready to be transferred to 2nd Generation family members due to an impending retirement, but there are also going to be a lot of Baby Boomers who don’t have a family member in line. Find a business that you’re passionate about and make sure that it can adapt to one important thing – technology!

Here are some benefits to consider when purchasing an existing business:

  • Proven Concept – Buying a business with a proven concept is less risky. Buying a business with a proven concept that’s been around for a while is even less risky (although there’s always risk!).
  • Recognition – It’s likely that you’re buying a business with a recognized name already. That’s huge!
  • Equipment – If equipment has been updated recently, the business will have a more seamless transition. You can then focus on improving and growing the business immediately.
  • People – In addition to getting knowledgeable existing employees, you can also have the existing owner stay on for a year or so to show you the ropes (looks great to banks!).
  • Customers – The business has existing, loyal customers! You need to make sure to continue to nurture those relationships.

There is a great deal of initial due diligence, but the most important task is to make sure the business has been (and will continue to be) financially stable for quite some time. I’d advise getting expert help with financials. Then, research if there will be continuing demand for that type of product or service. For instance, if the business is a VHS rental store, then I’d recommend you move on. If you’ve identified ways to make the business better or continue its mission, then you’re on the right track.

There is always risk when you decide to become a business owner, but it’s your job to find ways to minimize it. (Let me repeat: Don’t buy a VHS rental store.)

The Education Center on our website has more information about the pros and cons of buying an existing business, as well as how to get started. If you’d like to talk about buying a business or have a specific opportunity to evaluate, I invite you to contact me with any questions at visar.salihu@crossplainsbank.com.

 Member FDIC.

What is a digital wallet?

closeup women using smartphone at sunset

Tips for using your phone at checkout

Data breaches have become big news, with large retailers getting hacked for customer information like credit card numbers.

The good news is that thanks to new technologies like credit card chip readers and payment apps on your smart phone, your credit card information is safer than ever.

The real concern for many people: How do you use all this stuff???

Here’s a quick rundown on using smart phone apps like Apple Pay, Samsung, Pay, Android Pay, and Visa Checkout and why it’s a good idea to take advantage of the extra security they provide.

Why are smart phone apps a safer way to pay?

It’s easy to think that technology might sacrifice security for the sake of convenience. In this case, the apps make paying easier AND safer.

Every time you use one of the digital pay apps, it generates a new, unique number for use in that transaction only. That means the merchant – or anyone trying to steal your credit card information from that merchant – never sees your real credit card number. That transaction code cannot be used again for another purchase.

How do they work?

The apps may not work on older phones. See the chart to figure out if your phone will support this technology.

different payment methods you can do on your smart phone

 

Once you’ve confirmed your phone will support a digital payment method:

  1. Get the app. It may be pre-installed on your phone. If not, download the app that matches your phone type from your phone’s app store.
  1. Activate the app. Sign in to your account. The app may prompt you to create an account, if necessary.
  1. Add security measures. Enter a PIN and consider scanning your fingerprint for authentication purposes.
  1. Add your credit card information. Using the camera on your smart phone, take a picture of your credit card. The app will walk you through the process. Add as many credit cards as you wish. You can choose a default and just swipe the phone screen at checkout to choose a different one, if you prefer.
  1. Add gift cards, loyalty cards, debit cards and almost anything with a bar code. Once you get used to paying with your phone app, add gift cards and more to your digital wallet for additional convenience.
  1. Use it at the store. At the register, hold your phone over the payment box where you would normally slide your credit card. Gently hold your thumb over the button at the bottom of your smart phone to enter your fingerprint authorizing the purchase. You don’t even need to open the app.

Questions?

State Bank of Cross Plains supports the payment apps for all three major smart phone companies – iPhone, Android, and Samsung – as well as supports Visa Checkout on our bank-issued credit cards. Visit our website for more information.

Member FDIC.

Tax Tips and Planning

wealth management tax tips

By Jeff Supple, CFP | Vice President & Trust Officer

According to the Pew Research Center, approximately one-third of Americans do their own taxes. Whether you prepare your taxes yourself or get help from an accountant, nobody wants to miss a beneficial deduction or tax credit. The following are often overlooked opportunities:

Backdoor ROTH IRA

The details of the backdoor ROTH IRA strategy need to be examined, but it is viable for those with incomes that don’t allow for regular ROTH IRA contributions. The basic premise is that a non-deductible traditional IRA contribution is made and then those dollars are converted into a ROTH IRA. There is no taxable event on the conversion up to the contributed amount. If there are earnings made after the contribution and before the conversion, those earnings (but not the contribution) would be subject to tax if converted.

This strategy was made possible when the income restrictions on converting to a ROTH IRA were removed starting in tax year 2010.

Saver’s Credit

Many people know there are tax advantages to saving money in an IRA or employer-sponsored retirement plan like a 401(k). However, some don’t realize you may qualify for an additional tax credit based on your income level. The code rewards the act of saving for those who have the most difficulty finding extra money to set aside (the lower your adjusted gross income, the higher the tax credit).

The value of a tax credit cannot be understated.  While a deduction simply lowers your taxable income, a credit actually reduces the amount of your tax bill dollar for dollar. The credit specifics can be found on the IRS website.

0% Capital Gains

A long-term capital gain tax is applied to the appreciation of an investment held longer than 12 months.  The federal tax rate on long-term capital gains is 15 percent or 20 percent if you are in the 39.6 percent tax bracket. For people in the 10 percent and 15 percent tax brackets, the capital gains rate is 0 percent.

This may be a smart consideration for those who control their taxable income more easily in a given year (e.g. retirees) and are looking to sell an appreciated investment.

Planning Ahead for 2017

In addition to being aware of opportunities for deductions and tax credits, it’s important to be aware of the changes made to the IRS tax code annually. Below is a brief summary of the updates for 2017 to help you plan for taxes next year:

Standard Deduction

The standard deduction for married couples filing jointly is $12,700 for tax year 2017 (up from $12,600 in 2016). Single tax filers have standard deduction of $6,350 (up from $6,300 in 2016). Note that the personal exemption amount is $4,050 for tax year 2017, which is unchanged from 2016.

Tax Brackets

While the actual tax brackets have not changed, the income thresholds have. For example, the 25 percent tax bracket for a married couple filing jointly starts at $75,901 in tax year 2017 (up from $75,301 in 2016).

During this time of year, it’s always a good idea to be educated on the changes and look to the future as well, so you can easily plan for next year. We strongly suggest that you please consult your tax advisor for more information.

NOW is a good time to buy a home

By Cindy Mack, Assistant Vice President – Mortgage Loan Officer. NMLS#50031

As a mortgage lender, I am often asked the question: “Is now a good time to buy?”

My easy answer: If you are planning to stay in the area for at least five years, then “Heck yeah!  It’s a great time to buy.” 

Home Ownership vs. Renting

The cost of home ownership continues to remain at historically low levels even with the recent increase in mortgage rates. Home prices are appreciating at a nice, modest pace. The average appreciation this year for Dane County is on track to be about 3.9 percent.

Compare that to the cost of renting. According to Realtor.com, the cost of renting has gone up 20% since 2010. This means a monthly rental payment of $1,000 in 2010 is $1,200 today.

If you take out a 30-year fixed rate home loan, your monthly mortgage payment is going to stay the same for the next 30 years.  Not only will your housing cost remain the same, but with every payment, you are building equity in your home.  You just do not get that benefit from renting.  In addition to all of this, your home is increasing in value.

 

cindy-article-image

 

Some Perspective on Mortgage Rates

At the heart of the “Is now a good time to buy?” question is concern over whether the buyer will benefit from the current mortgage interest rate.

This rate may change from day to day or may stay the same for weeks or more. So what does it mean when we hear that interest rates are low? To offer some perspective, consider the mortgage rates from 30-40 years ago. Interest rates were at roughly 7.25 percent in the early 1970s. By the late ‘70s, mortgage rates rose above 10 percent. Mortgage interest rates peaked in the early ‘80s somewhere between 17-18 percent. By comparison, check out today’s mortgage rate at SBCP here.

State Bank of Cross Plains offers a mortgage loan calculator on our website to help you determine what your loan payment might be based on your down payment and today’s interest rate. If you’d like help getting started or want to get pre-approved for a mortgage loan, talk to one of our mortgage loan officers at the SBCP location near you.

Money isn’t Everything

From a dollars and sense perspective, it definitely makes sense to purchase a home. Home ownership, however, is not all about the money. There are benefits to owning a home that you just cannot put a price on. Just a couple of examples include:

  • Providing a stable living environment for your family
  • Being more connected to the community you are living in

So no matter how you measure the value of home ownership…Heck yeah!  It’s a great time to buy.

 

Member FDIC   equal_house_logo2-jpg-w180h143 Equal Housing Lender