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.

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.

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

 

 

 

 

Cutting the Fat: Make the Most of Your 2017 Budget

By Paul Manchester, Senior Vice President – Business Relationship Manager

For many small to mid-sized businesses, the details of a budget can take a back seat to producing the best possible product or providing the best possible service. You’re profitable. You’re managing cash flow. And you have a big picture idea of where your money goes.

You can do better.

Controlling your expenses can improve profits, free up extra capital for growth opportunities, help you take advantage of tax benefits, and put you in a proactive rather than reactive mindset.

Understanding Expenses

The first step in developing a disciplined approach to budgeting is analyzing your profit and loss statement from the previous year.

  • What worked?
  • What areas went over budget?
  • Which months were your most profitable and why?
  • Did you have a slow period?

If you aren’t sure how to create or read a financial statement for the month or the year, consider reaching out to one of the many business resources in the area, such as UW’s Small Business Development Center, the online tools offered by the U.S. Small Business Administration (SBA), or your local chamber of commerce.

You also may want to think about outsourcing your financials to an accountant or bookkeeper. The expense of hiring someone to manage this part of your business is usually more than offset by the time and money you save over trying to do it yourself without the necessary expertise.

Tips for Finding the Fat

Once you have the information you need at your fingertips, the following areas are a good place to start looking for extraneous expenses:

  1. Efficiency. What’s your process for getting from A to B? Is each document passing through 10 people when it really only requires two? Understanding your workflow can lead to efficiencies that save time, money, and manpower.
  1. Where are your best customers coming from? It’s important to measure and analyze the return on investment for your marketing efforts. Don’t forget to maximize some of the no-cost or low-cost opportunities available via social media and public relations.
  1. I read somewhere that most people use about 10 percent of any given technology’s full capabilities. If you’re paying for the technology, consider investing in some training for yourself or your staff to take advantage of its full power. In addition, there are tools that might replace traditional ways of doing things. For instance, face-to-face meetings are important, but not necessary every time. Look into online meeting technology to manage travel expenses.
  1. Accounts Payable. Turn your vendors into partners. Find out if there are incentives for paying quickly or paying in a certain way, such as PayPal. Could you pay for the year all at once for a discount? I’ve seen businesses get very good at reducing expenses by talking to their business partners and creating mutually beneficial arrangements.

State Bank of Cross Plains has an entire team of professionals ready to help you add to your bottom line. From our business banking tools to treasury management consultation, we’re here to serve as your business partner, resource, and secret weapon.

Member FDIC

Watch Your Pennies…

By Stan Koopmans, Senior Vice President – Business Relationship Manager

Watch your pennies, and your dollars will watch themselves. Watch your dollars, and your hundreds of dollars will watch themselves. Watch your hundreds of dollars, and your thousands of dollars will watch themselves. You get the idea.

The Penny Rule Makes Business Sense

I remember when I first heard the “Penny Rule” as a small boy, I thought it would be a good practice with my personal finances. After all, I was just starting to earn money as a paper boy.  A short time later, I realized the greatly expanded application of the Penny Rule during a conversation with my dad.

Driving home from a farm auction we attended, I asked, “Why did that farmer need five hacksaws?” My dad explained that the farmer didn’t need that many hacksaws, but that he didn’t keep track or take care of his tools. So when he needed to use a tool  – a hacksaw, for instance – he would just run to town to buy another. In other words, he didn’t watch his business, and because of squandering and wasting money over the years, it ended with him having to sell out in a farm auction due to too much debt.

I don’t remember what my dad bought at the auction that day. What I do remember is realizing that the Penny Rule had applications to the business world, as well.

Good Examples of The Penny Rule

It has been many years since I first heard the Penny Rule, but it still holds true. As a long-term commercial lender I have had the privilege of observing numerous great managers and owners watch their pennies when leading their businesses. For example, I have an existing customer that needs several expensive specialty tools (much more expensive and complicated than hacksaws) on job sites scattered throughout the Midwest. Every tool has its assigned place on peg boards at the main office and must be signed out. As a result, tool costs are controlled, and time and money aren’t wasted searching for existing tools or buying duplicates.

Another way to watch pennies add up is energy costs throughout the year. Money and energy saving considerations can include:

  • Occupancy sensors that shut off lights in rooms that are not being used
  • Timers that turn the heat down during the night and back up again early in the morning
  • Fuel-efficient vehicles
  • Door closers
  • Heat tape
  • Solar panels
  • and more!

Going Overboard

Can frugality be carried too far?  Absolutely. Like most everything in life, balance is essential!  If taken too far, penny pinching can be considered extreme (even bizarre) with no real buy in except for ridicule from observers and participants.

Two examples from my days as a bank examiner come readily to mind.  A former co-worker would stop his car along the road to pick up one aluminum can because there was a 5-cent rebate. Another example happened when reviewing the official minutes of a bank’s board of director meetings. Only every other page made sense because the minutes were kept on the back side of “used” paper.  This was also the type of paper they loaded into the copy machine.

So I hope you think of ways to watch your pennies, tens, hundreds, and thousands of dollars, but with proper moderation!

Member FDIC