How Companies Can Keep More Cash Insured

How can a company, nonprofit, or foundation make the most of its cash? It’s even easier to do now that Max partner American Deposit Management Co. has raised the rates it offers to Max members on FDIC-insured corporate deposits.

Now Max members using ADM’s AMMA savings account for their institutional cash will earn 0.85% — 85 basis points — on up to $25 million of cash, all FDIC-insured. That’s a considerable boost over most business bank accounts that pay close to zero.

As the Federal Reserve has raised rates over the past year, bank depositors have been among the last to benefit — but Max members have been able to take advantage of higher rates automatically. Now institutional clients can also enjoy higher rates.

To a corporate or nonprofit treasurer, or the trustee of a trust, this incremental interest income can make a significant difference. On every $1 million, that’s $8500 in interest each year, in perpetuity. In a regular business-savings account, that money would earn next to nothing.  Moreover, most bank accounts are insured to only $250,000, while the AMMA account can provide up to $50 million in insurance coverage.

Many companies and nonprofits are constrained when it comes to how they invest their cash, preferring safe and liquid instruments over riskier bets. They may use their cash for working capital, or may be required to keep in cash any funds they’ve raised from investors or donors.  

In these situations, it’s crucial to make sure this cash is safeguarded under FDIC protections, which are limited to $250,000 per depositor, per account type, per institution. When Max members use ADM for their corporate cash, they know their money is spread across multiple banks to maximize FDIC coverage.

We at Max use ADM’s solution for our own corporate cash, so we know how useful it can be. Many of our members, who find Max helpful for the cash they hold as individuals, also use ADM to manage cash for their companies, trusts, foundations, nonprofits, or residential associations, including co-ops. And financial advisors, who already use Max to help their clients earn higher yield on cash, often find they can add more value to their client relationships by delivering better solutions for corporate cash as well.

Learn more at MaxForBusiness.com.

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3 Ways to Maximize Your Company’s Cash

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.

  • CDs

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.

Learn more about Max for Business or contact member.services@maxmyinterest.com.

 

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