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Resources for best practices in cash management for SMB?

I am reaching out to see if anyone in the community has any helpful resources that they would share regarding best practices for cash management for small and mid-size businesses.  Of particular interest are the tools that people use to consistently monitor the banks that hold their deposits.  The expiration of the FDIC's insurance on all deposits (even over $250k) on non-interest bearing transaction accounts in January has us re-thinking our strategy.  We have good cashflow forecasting and visibility into our cash needs, and are more interested in protecting cash then maximizing its return.  Thanks in advance

Answers

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

I'm confused by your question.

You are concerned about protecting that cash in the event of a bank failure?

If that is the case, and you want a) liquidity, and b) FDIC insurance why not buy through your Stockbroker CD's on the open market (they spread the purchase across many CD's, with no one purchase over let's say $95,000 so w/interest you are under the $100K threshold).

Topic Expert
Linda Wright
Title: Consultant
Company: Wright Consulting
(Consultant, Wright Consulting) |

For general matters, go to the Association for Financial Professionals--what used to be the Treasury Management Association. There should be local reps for you to contact. Also, Capital Advisors (Ben Campbell) has made this sort of question a specialty.

Good luck.

Ernie Humphrey CTP
Title: CEO & COO
Company: Treasury Careers
LinkedIn Profile
(CEO & COO, Treasury Careers) |

I agree that the Association for Financial Professionals (AFP) can be a good resource. You bring up a few distinct issues. One is counterparty risk, there is no good tool to assess a bank's relative risk profile despite what happened in 2008. The other is related to short term investments, and what to invest in that offers the proper risk/reward for your company.

If you want to find out what other SMBs are doing there are several LinkedIn groups focused on Treasury Management that may also serve as a good resource, the largest one is 'Treasury Management Network'. I would be happy to talk offline if you like. I used to be the Director of Treasury Services for the Association for Financial Professionals and I am still an active CTP.

Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

Where did you hear that the $250k limit had expired?

Anonymous
(CFO) |

Sorry for the lack of clarity on my initial question. The limit for insured deposits is currently $250k. Prior to Jan 1, 2013 the Transaction Account Guarantee Program fully insured all deposits in non-interest bearing tranaction accounts (without limit). That program has since expired, so deposits are only insuranced up to $250k limit.

Ernie Humphrey CTP
Title: CEO & COO
Company: Treasury Careers
LinkedIn Profile
(CEO & COO, Treasury Careers) |

It has not changed at this point. http://www.fdic.gov/deposit/deposits/dis/

Anonymous
(Analyst - Finance) |

That is correct, the $250K insurance for all deposits by the FDIC, to date, has not changed (former employee of the FDIC).

Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

That's why I was asking; as my research was showing it was still $250k. Thanks guys!

I have used this resource before when shopping banks or had concerns of a bank's rating: http://www.bauerfinancial.com/btc_ratings.asp

Invest the time into researching your bank and understand their position. Know who they are, how long they have been in business, etc.

I was shopping once because we typically see high monthly fees due to the nature of our business. I had a bank come back and tell me there would be no fees. I found this awesome, but it made it leery. After asking more questions they told me they are currently looking for businesses that deposit because that is what they are looking for to enhance their portfolio. Not liking that answer, I looked them up and found they only had a two star rating; whereas the other two banks I was looking at were five star. They've since been sold to another branch. Here's a link to more about star ratings: http://www.bankrate.com/finance/savings/what-you-should-know-about-bank-ratings.aspx

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