Monday, June 18, 2018

Michele Braun: A Primer On Payments For Business

Today in the U.S., we write about 40 percent of the number of checks we wrote in 2000. In 2000, roughly one-third of those checks were written by businesses, compared with about 45 percent today. This statistic suggests that consumers are moving to electronic payments faster than businesses are. Of course, businesses are on the receiving end of most of those consumer electronic payments, so your business may want to make separate decisions when selecting incoming and outgoing payment options.

Our economy is long past the days when most payments were made in cash or even checks. One of the earliest responsibilities of the Federal Reserve System, enacted in 1913, was to create a national system for clearing checks as prerequisite to ensuring a nationwide economy. 

Herewith is a tour of those options.
Wire Transfers
Wire transfers are fast and, once initiated by the sending bank, irreversible.  Generally, it’s not efficient to use wire transfers to pay bills because few businesses are set up to send or receive these in an automated way and banks often charge high per-transaction fees. However, if you are selling something valuable — like a building, a large block of stock or bonds, or the entire company — ask for a wire transfer. Once your bank confirms the money has arrived it cannot be taken back. You’ll want to confirm receipt before you hand over that substantial asset.

Automated Clearing House
ACH transactions are also commonly known as “direct deposit,” “direct debit” and “e-checks.” They are widely used for automated payments from consumers. ACH transactions can flow both directions — to make a payment to someone else’s account (a credit or direct deposit) or to request funds from another account (a debit, e-check, or automated withdrawal). The ACH system was intended to carry a large number of transactions at low cost. Transfers are typically overnight, although new options now permit same-day credit transfers. In general, a business should think carefully before permitting another entity to use an ACH debit against its accounts. Banks can readily block this, so ask. For close business relationships, however, these can be quite efficient. For example, a car dealer may be required to permit the manufacturer to debit its account for the value of cars delivered. Note that money your business collects by issuing an ACH debit can be reversed within a couple of days, so confirm the timing with the bank before you spend the money.  

Credit Cards
Visa and MasterCard credit cards are issued by banks and operate under rules established by those two “network” companies. American Express and Discover issue their own cards and set their own rules, although many topics — such as the technology behind chip and magnetic stripes — are set cooperatively, so that the same card reader can accept all transactions. Business credit cards are useful for managing transactions, such as for travel and authorized purchases. The credit card networks also offer “cardless” services to enable business-to-business payments.  Several federal laws protect consumer credit card transactions, but not cards issued to businesses, so evaluate decisions to accept card payments vs. making card payments separately.  

Debit Cards
Popular with many consumers, a bank-issued debit card transaction withdraws the money directly from the account to which it is connected. If you know any business that pays its bills with a corporate debit card, please let me know so I can learn why. 

SWIFT and Correspondent Bank Accounts
The SWIFT network enables banks to exchange payment instructions internationally. If your business makes or receives payments across borders, the banks involved probably maintain accounts with each other (called correspondent bank accounts) and transfer information via SWIFT. Cross-border funds transfers can be expensive and slow. Sometimes that timing can be justifiable — depending on the country and local rules — but some banks and nonbanks are challenging this model. If your business sends or receives money internationally with any frequency, it’s worth the effort to interview several banks and push back to try to reduce fees and improve timing of receiving those funds.  

Paper checks are still widely used for business-to-business transactions, possibly because companies’ computer systems were built when checks were the dominant method for noncash payments. Improvements in processing and the “Check 21” law mean that you should not count on a “float” delay between when you send a check and it clears your bank account. Money received by check is not final, that is, it can be recalled for a period of time. Therefore, consider carefully if funds have finally cleared before releasing any substantial asset. This uncertainty is one reason retail locations now use scanning services at the cash register.   

Coin and currency transactions are easily understood. Safe and secure handling does carry cost, but once you receive that cash payment, it is complete. Unlike debit and credit card payments, checks or ACH debits, there is no recall mechanism built into the payment transaction. A customer who wants his/her money back has to ask nicely or consider legal action, as well as have a legitimate case.

For our purposes, think of PayPal as an intermediary enabling consumer card and ACH payments. PayPal-provided computer code (APIs) make online payments fairly available to small businesses and nonprofits.

Cyber Currency, Cryptocurrency, Bitcoin
These new, algorithm-based currencies have so reached the public consciousness that the Feb. 25, 2018, New York Times for Kids includes a graphic on “What is Bitcoin?” The graphic ends with one of its most important features:  “Bitcoin transactions can’t be reversed… and if you want your money back, too bad!”

Unless this is your business, you should stay away from this “currency” while markets, regulators, banks, and lawmakers figure it out. 

Michele Braun directs the Institute for Managing Risk at Manhattanville School of Business and is managing executive of The Crossway Group LLC, a consulting and professional training firm. She can be reached at or at

Thursday, May 17, 2018

The Role of a Nonprofit Board of Trustees: Taking Risks & Avoiding Risks

Michele moderating a panel at the NFP Summit 5-18

I like to say that for effective programming, management has to “get everyone on board.”  That is, in a successful organization all members (employees & volunteers) know their roles and understand how they contribute.  This particularly applies to effective risk management, as risks are everywhere… as are opportunities to help the organization successfully meet its mission.  On May 7, 2018, the Manhattanville School of Business asked a panel of experts at the NFP Leadership Summit to share their thoughts on “Risk Management Hot Topics for Nonprofit Board Members and Executives” with a room full of not-for-profit executives.

The panelists highlighted a number of current issues and on-going topics that should be discussed with nonprofit board members at least annually.  Nancy May, President and CEO of Board Bench Companies, LLC, emphasized the importance of being clear about the roles and purview of the board vs. those of the executive director and senior management, particularly for organizations that rely on volunteers’ expertise.  Michael Santocki, Managing Director of Crystal & Company, spoke to the need to stay up to date on laws that effect all employers, whether for-profit or not-for-profit.  Current examples include “ban the box” in hiring, compensation rules, and potential ramifications of legalized marijuana.  Liz Gousse, Senior Manager at PKF O’Connor Davies, LLP, addressed succession planning and reputational risk.  I talked about how organizational culture helps manage or increase risks and the importance of updating board members on routine procedures as well as on significant emerging issues.

Panelists contributed the following Successful Strategies and Recommended Practices.  Join our conversation by emailing me your organization’s risk priorities, lessons, and questions ( and I will discuss them and experts’ responses in a future article. 

Michele Braun, Director
Institute for Managing Risk, Manhattanville School of Business

Explicit discussion of risks and risk management will help your organization assess risks that will help it achieve its mission as well as those to avoid. 

Accordingly, three questions for members of nonprofit boards to ask:
What risks does our group face that could derail our mission?
What risks could our group take that would help us accomplish our mission?
What processes do we currently have in place for assessing and managing risks? 

Elizabeth G. Gousse, Consulting Services Senior Manager
PKF O'Connor Davies, LLP    
Conflicts of Interest.    While the majority of Boards have conflict of interest policies, most do not require annual disclosure of these conflicts (88% according to National Council of Nonprofits).  Discuss with the entire Board the types of situations where a conflict can arise and what would happen if one of the board members disclosed that s/he had a conflict of interest.

Whistleblower Protection.      A written policy is critical to managing risk.  And, IRS Form 990 (Part VI, Section B, line 13) requires NFPs to confirm the existence of such a policy.

Self-assessment process.        Annually, the Board should compare its own practices to industry best practices, assess areas where there are “holes” in Board members’ expertise, and use this information when recruiting new members.

Diversity.         The Board should focus on inclusion and sensitivity to the people that the not-for-profit serves.  [In a diversity survey conducted by BoardSource 25% of respondents Boards were all white.]

Nancy A. May, President and CEO
Board Bench Companies, LLC

NFP boards should periodically discuss strategic and enterprise-wide risks, as well as day-to-day operational risks.  Examples for a board to explore include
·         The ramifications of poor program delivery/outcomes that impact the “customer” or constituents served,
·         Risks of not having enough or the right talent on the board to support the mission,
·         How a board’s collective and individual liability is covered, if at all,
·         Financial risks arising from donors’ restrictions on how monies can be used, 
·         Reputational risks such as
o   What happens if a board member is held liable for actions outside the boardroom?
o   What happens if the organization is impacted by political implications? 
o   Unexpected negative publicity following policy or operational actions or decisions, or inaction.

Michael Santocki, Esq., Managing Director
Management and Professional Risk Group, Crystal & Company

Nonprofits face increasingly unpredictable and costly exposure to the growing impact of employment claims, cyber exposures and government scrutiny into NFPs (particularly in NYS). 

These exposures (greed, lust etc.) can be hard to analyze, anticipate, and mitigate.  Other exposures are actively evolving – e.g., Ban the Box, Pay Equity laws, rise in marijuana smokers in the workplace (and legal in some states).

Although risk elimination is impossible, these exposures can be transferred through an insurance product.  Cyber, D&O, Crime, and Employment Practices insurance are all readily available.

Senior NFP staff members should look closely at their insurance policies and at the broker used to procure those policies to ensure that the organization is getting the coverage it needs and wants.

Thursday, January 11, 2018

I resolve this year to...

Around the corner from where I live is a small gym that I drive by every morning on my way to work.  Located at a busy intersection, there’s always a good amount of traffic surrounding the site, but of late, I’ve noticed even more people driving in and out of that parking lot than usual.  This should come as no surprise, as 2018 is still in its infancy, and many people remain solid in their resolve to stick to their New Year’s Resolution.

Regarding those resolutions, topping the list is of course usually something regarding physical fitness and getting in-shape.  Others choose to focus on their mental well-being or even relationships.  But having worked in higher education for quite some time, I’ve noticed another sort of resolution for adult learners: to go back to school and earn a degree.  

It makes sense if you think about it.  How many times in late-December or even early-January do we see or hear the phrase ‘New Year/New You?’  People look at the start of the New Year as a clean slate, and a chance to start over.  And along the way throughout my career, I’ve encountered countless people who attended college at one point in time, but life got in the way.  They truly did intend to earn their bachelor’s degree, but they instead decided to focus on their career, or they got married and started a family. 

Fortunately, the academic calendar operates a little differently for the adult student.  While the eighteen year-old co-ed has their bags packed and ready to move into their forced-triple of a dorm room in mid-August, the non-traditional degree-seeking student (most often ages 21 and older), starts working toward that degree that has long eluded them in January or other times throughout the calendar year.  

Convenience is key with the adult learner, and this is something that Manhattanville College does quite well.  The APPEAL degrees offers accelerated bachelor’s degrees for students (21 years and older) all throughout Westchester County, lower-Fairfield County, and even Manhattan and the boroughs.   The classes run in seven-week sessions, so students are never far from another session starting.  So if you did in fact make that New Year’s resolution to focus on mental fitness and earning your degree, this might be something to consider.  While the first accelerated APPEAL term of 2018 started this past week, there are eight accelerated seven-week courses set to start in early-March.  

Alas, some people need plenty of convincing when it comes to taking initiative and getting started on their New Year’s Resolution.  So in between researching which local gym offers the best pricing for new members, why not learn more about the APPEAL program at Manhattanville College by attending our next open house and faculty career panel on Wednesday, January 17th at 6:30pm?  Here’s a great opportunity to meet faculty, staff, and students from the School of Business, and to take a closer look at our accelerated bachelor’s and master’s degree programs.   If nothing else, you’ll feel as though you took one small step toward adhering to that New Year’s Resolution, and it’ll require much less painful exertion than that first trip to the gym. 

Register for our open house by clicking here. 

Whether you are new to college, have an associate's degree, a transfer student or transitioning from the military I can help you  raise your APPEAL with career focused bachelor's degrees.  

Jon DeBenedictis
Program Director, APPEAL

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