Today’s business climate is ripe for mergers, acquisitions and major investments of all types. With the 2018 tax cuts leading to an infusion of free cash flow for many businesses, coupled with a government focus on deregulation, there is a great deal of money flying around in the business world. All this extra cash creates countless investment opportunities for businesses, and those major investments often require you to open an escrow account for business.
Why do businesses need escrow accounts?
Most people are familiar with the concept of escrow as it’s integral in the home buying process. But fewer have experienced the need for business escrow. This need arises in business when there is an especially large or lengthy transaction in the works.
As you well know, many deals, large and small, can take an extended period of time to complete. Maybe the product being delivered is highly customized and requires significant investment by the manufacturer to deliver, or maybe the deal has regulatory hurdles that might take years to surpass. In any event, businesses need assurance when entering into a deal of this magnitude or length, that the other party will hold up their end of the bargain. The most common way to do this is to secure the funds necessary for the deal with a 3rd party. This is what creates the need for an escrow account.
How do you select an escrow provider for your business transaction?
It doesn’t matter whether this is your first time selecting an escrow provider for your business, or if you’re very experienced with escrow. It’s always smart to evaluate (or re-evaluate) your options when selecting a service provider for your next deal.
You may think all escrow providers are basically the same – they hold your money until it’s needed, for a fee. But that’s only half of the equation. In today’s climate, we want to keep those escrow funds working for us, even while they are locked away. That is why selecting the right escrow provider might be the most lucrative decision you make today!
Fintech is changing escrow services, in a good way.
With the advent of fintech, many financial service providers are getting smarter, and that benefits you. When applied to escrow services, fintech can create advantages that were only dreamed of, just a few years ago. The most advanced escrow providers can leverage a network of banks and credit unions to not only get a return on your escrow account while those funds are locked away, but to optimize that return with nationally competitive rates.
In addition to earning a competitive return, you also need safety and security with your escrow funds. In the past, the most common way to achieve this safety was to select an escrow provider with a great reputation and a long history in business. Those times have changed.
By leveraging fintech, certain escrow providers can guarantee the safety of your funds through by providing access to FDIC / NCUA insurance for your entire balance. You’re probably thinking about the limits with FDIC and NCUA, and how those are incredibly low when compared to the size of most business deals that need escrow. And, you’re right. The FDIC / NCUA limit of $250,000 per depositor / financial institution also applies to business. But, fintech has found a way to increase those limits.
At The American Deposit Management Co. (ADM), we’ve developed fintech to take escrow services to the next level. Our proprietary network of financial institutions allows us to secure over $80 million in funds, all with access to FDIC / NCUA insurance, with a single deposit and a single account statement. In short, we’ve leveraged our exclusive deposit management services to transform escrow from an expense to an investment!
How to open an escrow account for business?
All you need to open a business escrow account is a quick call to the ADM office or a visit to our business escrow services page. One of our talented specialists will work with you to open your account and make your deposit. That’s it! Once you’ve opened your account, sit back and watch your balance grow using our convenient client portal. The days of letting money sit idly in escrow are over!Contact ADM to get started today. Or continue your research into business escrow services by browsing our latest articles.