Business escrow is an industry that has greatly benefited from the rise of fintech and other disruptive technologies. Making large transactions or purchasing from a new vendor has never been safer, thanks to fintech powered escrow services.
Here at the American Deposit Management Co. [ADM], we’ve leveraged our proprietary fintech to take business escrow services to the next level. That’s because our technology allows businesses to access nationally competitive rates of return on top of the safety expected from an escrow account.
What is an Escrow Service and How Does It Work for Business?
In short, escrow is a service designed to provide assurances to counterparties involved in a transaction. The escrow provider is a safekeeper for cash or other assets provided by a party in the transaction. An escrow agent releases these assets to the other party only when certain conditions are met.
What types of businesses commonly utilize escrow services?
Escrow is already very popular in real estate purchases or mortgages, but it can be useful for business transactions in almost every industry. Those investing in an expensive asset or a large amount of inventory may want to minimize risk of a sale gone bad, while others trying to predict reopening from COVID-19 lockdowns may need extra protection in case of governmental delays.
Escrow protection can also be important for ecommerce companies and those conducting transactions in emerging markets, which may be more prone to fraud. And for those businesses looking to expand, utilizing escrow for mergers and acquisitions holds both parties to their pre-set obligations and can be a life saver if problems arise with the transaction.
What are the key features of business escrow services?
The first thing to know is that all business escrow agents are not created equal. The level of service, the types of protection available, and the return you can earn on your secured funds can vary greatly from agent to agent. However, there are some key features that you should expect from any escrow provider.
Monetary Safekeeping for Both Parties
Both buyers and sellers can benefit from the services of an escrow agent. For buyers, their payment funds are held securely with the escrow agent until the conditions for the sale are met. On the other hand, sellers using escrow services are assured that the earnest money for the transaction is presented to the third party before they deliver the product. This process maintains fairness and satisfaction between both parties.
Reduction of Transactional Risk
The risk of a sale gone bad for either party is minimized when utilizing an escrow service. For buyers, escrow provides the peace of mind that your expectations will be met, or you will not release the funds. For sellers, goods that are fragile, expensive, or have long lead times can be covered under the terms of the escrow agreement. Since the onset of COVID-19, businesses have utilized escrow to protect against lockdowns and other uncertainty related to government regulations that can impact product delivery.
Chargeback risk from buyers can also be reduced by escrow services. If the conditions for the sale are not met, the funds will not be returned to the buyer unless the product is appropriately returned to the seller. For new customers, sellers can avoid relying on customer’s “good faith” or an unreliable payment method by leveraging escrow services. In summary, escrow services provide a trustworthy third party that can greatly reduce transaction risk for buyers and sellers.
Additional Benefits for ADM Escrow Customers
At ADM, our goal is to simplify the escrow process for businesses while adding value to the process. That’s why we offer access to extended protection and nationally competitive returns to our business escrow customers. This means your funds will have access to FDIC / NCUA protection for the entire balance without the standard limitations, and once your funds are ready to be distributed, we’ve got you covered with additional fraud protections.
In addition to safety, our proprietary network of banks and credit unions will compete for your cash, so you get access to nationally competitive returns, without the geographic limitations of traditional banking.
Earn more, risk less™ with escrow services by ADM
Our team of professionals is our “secret sauce,” and we look forward to hearing from you. If your business is interested in escrow services or other cash management solutions, don’t hesitate to contact the ADM team.
You can easily chat with one of our agents using the box at the bottom of your screen, or simply give us a call. We don’t operate a call center, and if we aren’t available, we will always return your messages.
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