Cash should be working its hardest for you. That’s especially important for corporate, foundation, and nonprofit cash. This money has to be kept safe — it’s needed for payroll, ongoing expenses, or acquisitions — so it can’t be invested in risky securities. In today’s low-rate environment, it can be tough to find a safe place to keep cash that allows it to earn interest.
Here are three ways treasurers can maximize both safety and yield.
- Online savings accounts
Some online banks offer commercial accounts that yield more than what your brick-and-mortar bank pays. Be aware of FDIC insurance; choose a bank that is part of this government guarantee program, and make sure to keep your company’s account below the $250,000 limit.
While you won’t have a branch, online savings accounts make it simple to move money to and from your company’s regular checking account using ACH (likely the same way your company handles direct deposit for payroll). You can also arrange wire transfers if you need the money to move the same day.
A certificate of deposit, which pays a fixed return that’s usually higher the longer the term of the CD, is a safe place to keep your corporate cash — as long as it’s FDIC-insured. The drawback of a CD is that your money is typically locked up until the end of the term, and you may have to pay a fee to retrieve it early. This makes CD a less attractive option for businesses that need access to their cash.
- Max for Business
We think companies should be able to earn a higher yield on their cash, FDIC-insured, just as individuals can by using Max. That’s why we’ve partnered with the American Deposit Management Co. to offer high-yield, FDIC-insured accounts to commercial, institutional, nonprofit, and trust customers. Through Max, ADM offers a preferred yield of 0.75% on balances up to $5 million, and a competitive yield on balances up to $50 million, all FDIC-insured. ADM clients include top U.S. corporations, municipalities, universities, public funds, non-profits and trusts.