For businesses large and small, there are significant advantages to having extra cash on hand — the biggest one being that, when bills come due, you have the money to pay them. In fact, insolvency is the primary reason businesses go bankrupt.
But in order to maximize and protect your deposits you can’t just have that extra cash lying around. You have to ensure it’s protected from any unforeseen circumstances or anything that could diminish your cash reserves. For that, you have options, but not all are created equal.
Why does cash management matter?
Many prospective clients come to us asking a simple question: “If I’m happy with my current bank, why can’t I deposit my extra cash there?”
Our answer is, you can. But it may not be your safest choice. The Federal Deposit Insurance Corporation only insures cash deposits for a single depositor in any one bank up to $250,000. That means, if you deposit $1 million into one bank, only a quarter of that money is protected in case of bank failure. That may not seem like a looming threat, but remember it was just a decade ago that the Great Recession hit and thrust many longstanding and trusted institutions into crisis.
Our proprietary deposit management technology, on the other hand, will spread your corporate cash throughout our network of banks and credit unions — a process that can secure FDIC / NCUA insurance for over $75 million.
What’s the advantage of deposit management over investing?
First and foremost, while return is key, security is paramount. And investing your extra cash incurs significantly more risk than our deposit management services, where the primary focus is ensuring every dollar you deposit is covered by the FDIC or NCUA.
Another benefit of deposit management is that it keeps your cash reserves liquid. When you need your money, you can access it almost immediately. Which, as we mentioned above, can mean the difference between success and insolvency.
While we prioritize the security of your corporate deposits over everything else, we are also fiercely committed to delivering a competitive return. This is all thanks to our proprietary fintech and our network of financial institutions. Many times, those banks need deposits to fund their businesses. As a result, they’re willing to pay ADM competitive rates for access to those funds. We then pass those rates along to you. As a result, our accounts are currently earning seven times the national average money market fund.
How do I start the deposit management process?
We offer a variety of solutions to suit every client and every business, with options designed to appeal to your risk profile, bank preferences and liquidity needs. Our Solutions Finder can walk you through the process, or you can reach out to one of our friendly associates today. We look forward to helping your organization make the best possible use of its extra cash – keeping it safe, while allowing it to earn a competitive and attractive return.
*American Deposit Management Co. is not an FDIC/NCUA-insured institution. FDIC/NCUA deposit coverage only protects against the failure of an FDIC/NCUA-insured depository institution.