As with personal finances, many small business owners find it difficult to keep enough cash on hand to handle the proverbial rainy day (or a rainy few years). Now more than ever the saying “Cash is King” rings true. Your customers are paying slower and your vendors are demanding payments faster. You need to keep enough cash on hand to make sure that you have enough working capital while still keeping your business nimble and ready to handle extraordinary events.
Savings and Money Market Accounts
First Bank of the Palm Beaches has excellent savings products available for your business. We typically keep our money market rates aggressive to attract solid businesses to our bank and to provide the incentive to maintain adequate liquidity.
CDS and IRAs
First Bank does not manage investments accounts but does offer CDs and IRA products tied to CDs in order to help put money away for longer periods of time. Interest rates are at historic lows, but two and three year CDs accomplish both goals of generating a return on cash as well as locking funds into savings products so as to discourage frivolous spending.
Savings is about habit. Get into the habit of putting money away every month and make your business stick to it, no matter how painful it is. Setup an automatic transfer via First Bank’s Cash Management product every month and treat the money that goes into your savings account as if it were gone.
Keeping enough cash on hand is a must for your small business for any number of reasons. Not only is it important to prepare for unexpected hardship, if an unexpected opportunity comes up, you will need cash in order to take advantage of it. First Bank is in the business of making business loans, but no bank will finance projects at 100% any longer and banks will not make loans to businesses that do not maintain enough liquidity to handle events.