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I’ve got 100 employees that need to get paid this month, and they need to get paid $7500. How can I not have more than $250k without having to do really complic
by chipsa 4y ago
I’ve got 100 employees that need to get paid this month, and they need to get paid $7500. How can I not have more than $250k without having to do really complicated stuff that will make my accountant hate life?
A quarter mil is a lot for a person. It’s not a lot for a business, and businesses were most of SVB’s clientele by asset amount.
- pclmulqdq 4y agoDon't split into accounts at a $250k limit, but have 2 accounts with working capital in different banks. This is the same principle as having servers in 2 different datacenters. SVB's clients will not lose all their money - their assets can cover most of it. You mostly just need the second bank to cover the period in which you may not be able to access your money.
- frollo 4y agoHeck, I don't think I'd manage to have $250k in liquidity in my whole life and this is my standard operating procedure for my money. You never know when some weird, once-in-a-lifetime stuff is going to hit your bank. Learned the lesson the hard way when I ended up stranded in the middle of nowhere without a working debit card for a damned IT outage.
- pclmulqdq 4y agoYeah, this is why my personal money is split between 4 banks, I make sure to have Visa and Mastercard, etc. I have seen bank computer outages, fraud, and other stupid shit that shuts part of the system down, and I want my money to be highly available. There should be no reason not to run a company the same way.
- acjacobson 4y agoI do this too. I've been locked out of a bank account for a week or so because something in their system flagged a review. A tiny blip like that can be really impactful on handling day to day expenses - it makes sense to have a backup.
- swatcoder 4y agoIf you only have one payroll in reserve, then you're already living on the edge and hopefully recognize that one rare-but-real bad event could knock you out of the game. If you're lucky, someone might still come in and save you because your loss is a pittance compared to some. Good luck to you. But if you have more than one payroll, then you should consider that bank failures and other risks are part of the system and spread your capital across institutions so that no one failure wipes you out. Risk management and "accountants that hate life" are some of the overhead costs of significant assets.
- sangnoir 4y agoLike every other asset you don't want your business to lose: you shouldn't under-insure bank balances. Sticking to legally mandated minimum insurance unsuited to your enterprise is negligence. When the unimaginable happens, you can easily get bridging finance on the strength of your insurance (if your insurer is not responsive enough for your payroll dates)
- p_j_w 4y agoThen buy more deposit insurance.
- DennisP 4y agoI googled and couldn't find a way to do that. The only options I saw were various way to split funds among multiple banks. Could you tell us where to buy more deposit insurance?
- p_j_w 4y agoIf that's even an option then there's no reason to be having this discussion. These companies were irresponsibly putting all of their eggs in one basket and now I'm being asked to bail them out?
- p_j_w 4y agoAlso, this: https://www.moneycrashers.com/dif-insurance-massachusetts-depositors-insurance-fund/ https://www.moneycrashers.com/dif-insurance-massachusetts-de...