I work for a general contractor who receives large payments from clients each month, but then pays much of that out to subcontractors. So, for a few days to a week or so, we have a low-seven-figure balance in checking that of course substantially exceeds FDIC protection. However, there is no simple way to protect it that doesn't require daily monitoring and some risk of overdrafts should we make a mistake. The activity is very unpredictable day to day, and no two months are the same. Is there an automated sweep/zba kind of product out there that will do automatically move money to achieve FDIC or at least a higher level of protection (i.e. money market fund or at least diversify the location)? The banks I have talked to don't have it much to offer - what they do have is not automated, and has transaction count limits. What are best practices to provide a little risk protection for small businesses with relatively large short term balances in their checking account? Should financial lighting strike our bank and they closed their doors even briefly, it would destroy us and our owner long before the regulators and lawyers sorted it out.
Cash management for FDIC security over short term cash spikes
Answers
In which state is the business located?
1
Colorado. Thanks
Your first defense is to bank at a very well capitalized bank. You can check bank liquidity at many places, including FDIC website.
After that, one service like you described is the Insured Cash Sweep. Its website lists the Colorado banks that use them.
Colorado has many large banks that should have a similar service. Call them and ask to be connected to their business cash management department.
1
Thanks. Yes the ICS seems to be the option available, however it requires us to actively manage our balances daily, we need to be very much on top of the deposits and importantly when the subs are presenting their payments. And we are limited to 6 transfers out of it each month. We are a small accounting shop, and if we make a mistake we could be 6 figures everdraft.