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How to Protect Your Business Cash During Banking Uncertainty

While bank failures are rare in the grand scheme of things, they can and do happen - as recent events like the closure of Silicon Valley Bank go a long way towards proving. When these types of bank failures do occur, they can be catastrophic. They happen quickly and often without warning, leaving business owners in particular in one of the most distressing situations imaginable.

Thankfully, all hope is not lost. If you want to be proactive and protect your business cash during a period of banking uncertainty, there are a few key things you'll want to keep in mind.

What is Treasury Management?

"Treasury management" is a term used to describe how you manage not only your business' daily cash flow but also other large-scale financial decisions that are taking place.

It's a way to maintain oversight and visibility into your organization's liquidity. It also brings the added benefit of helping you establish and maintain credit lines; it gives you the insight you need to optimize the returns your various investments yield and more. Many also use it to help put together long-term strategies on the best ways to use (and grow) the amount of cash they have.

Is Treasury Management the Same as Cash Management?

Treasury management and cash management are not the same but are undoubtedly related concepts. Cash management, as the name suggests, is the process you use to oversee your daily cash flow to ensure you always have access to the money you need when you need it. Think of it as a subset of the more significant idea of treasury management.

If you're operating in an industry that puts you at particular risk of cash depletion, a forward-thinking approach to cash management can help you more effectively balance cash flow. It can then make it easier to replenish those funds so that even in times of uncertainty, you can still capitalize on opportunities instead of being forced to watch them pass you by.

Evaluate Your Current Exposure

More than anything, it's essential to understand precisely how exposed you might be should any particular bank fail. If all of your business cash is housed exclusively in one bank right now, the chances of you getting cut off should the bank fail are 100%.

Please list all your accounts, including where they are located, what types of funds they are, how much money is in them, and more. Know your risk surface profile to make the most actionable decisions moving forward.

How to Protect Your Business Against a Bank Failure

To protect your business against total bank failure, consider the $250,000 cap first. Remember that the FDIC insures up to $250,000 per depositor, per financial institution, and the ownership category. If the total amount of money you're worried about potentially losing is more than $250,000, consider an alternative, like a bank part of the IntraFi network.

These banks offer what is known as an Insured Cash sweep and a Certificate of Deposit Account Registry service. Essentially, your money is spread across multiple banks in the IntraFi network so that no more than $250,000 is in any one place simultaneously. That way, even if a bank fails, you're not cut off from all your financial assets. The chances that multiple banks would unexpectedly fail simultaneously are far lower than even that of a single failure.

Along the same lines, you should use multiple business bank accounts whenever possible. As a rule of thumb, always keep your emergency fund in a separate account at a different bank from your daily operations account. Again, this will protect you against any single point of failure.

Your Bank Failed. Now What?

If your bank should fail, the first thing you need to do is gather the facts. Find out what happened, why, and when you can access those funds per the FDIC. Communicate this information to all key stakeholders and immediately set up a new business bank account with a different financial institution. At that point, you can also embrace some of the best practices outlined above to mitigate risk from this type of thing happening to you in the future.

If you find that your bank has suddenly closed, don't worry - there are still steps you can take. One of those involves contacting one of our passionate and professional team members who can help you mitigate the risks associated with these uncertain times. To find out more or to get answers to any other specific questions about protecting your business cash that you may have, please don't delay - contact us today.


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