Author Topic: Business Owners -- High Yield Checking?  (Read 1493 times)

HBFIRE

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Business Owners -- High Yield Checking?
« on: November 24, 2018, 11:37:08 AM »
For those of you who own businesses, have you found a good high yield checking account to use?  I know there are several good ones for personal, but they are too restrictive on the max amount for business use (we require ~ 200+ K in liquidity to cover ongoing expenses).  We're currently using Chase Business checking and it kills me what we're losing out on.  I spent so much time optimizing my personal accounts, and I hadn't really researched options for our business.

I read a bit about America First Credit Union, this might be a good option, but couldn't find any reviews on it.

profgubler

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Re: Business Owners -- High Yield Checking?
« Reply #1 on: November 25, 2018, 11:03:47 AM »
If you find something let me know. This bugs me too, to have that much cash sitting there.


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DocMcStuffins

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Re: Business Owners -- High Yield Checking?
« Reply #2 on: November 25, 2018, 07:27:10 PM »
Agree, very frustrating.  A lot of cash sitting around doing nothing. 

walkwalkwalk

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Re: Business Owners -- High Yield Checking?
« Reply #3 on: November 26, 2018, 11:30:22 AM »
Your cash is making you money. It is called return on assets.
« Last Edit: November 26, 2018, 11:39:32 AM by MMbergmann »

tralfamadorian

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Re: Business Owners -- High Yield Checking?
« Reply #4 on: November 26, 2018, 01:44:46 PM »
Ouch, that's a lot of cash. Are laddered six month CDs with no early withdrawal penalties an option for at least a portion of that?

Much Fishing to Do

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Re: Business Owners -- High Yield Checking?
« Reply #5 on: November 26, 2018, 02:26:35 PM »
I had the same problem.  Is the $200k a constant or is their a large fluctuation going on?  This has been a few years, but I often would have anywhere from zero to $400k floating between when I'd pay out to subcontractors and when I'd get paid (generally a couple months later).  It was rarely in the higher range though and normally around $50k.  So I kept about $50k in the account and would borrow from a credit line for the big outlays and pay back immediately after receiving the funds.  This allowed me to draw funds out of the account and investing instead of letting it sit there.  Given the interest rate on the credit line was not much more than prime and I was more often not using it this worked out better for me than having a huge sum like $400k sitting there just to be there when needed.

HBFIRE

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Re: Business Owners -- High Yield Checking?
« Reply #6 on: November 26, 2018, 05:17:20 PM »
Ouch, that's a lot of cash. Are laddered six month CDs with no early withdrawal penalties an option for at least a portion of that?

No, if this was an option we wouldn't be keeping it in a checking account.  As I mentioned, we need it to be liquid.  Our business spends ranging from ~ 5-10K/day on google advertising costs, so we need to be able to pay off our CC (which gives 2% back on spend) while waiting to receive our wire from partners (generally net 30 which means need 60 day of float approx).  We have a 100 K Spark cc which helps with the float for 30 days.

Looks like I may have found a good business solution through Merrill Lynch @1.9x%.  Stay tuned, have a call with them when I get back home next week.
« Last Edit: November 26, 2018, 05:24:11 PM by dustinst22 »

HBFIRE

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Re: Business Owners -- High Yield Checking?
« Reply #7 on: November 26, 2018, 05:22:06 PM »
Your cash is making you money. It is called return on assets.

Sorry, I'm not sure what you mean here.  Sure, our cash makes us money because of our business profits.  But it could be earning more if it were in an account giving interest.  I'm obsessed with optimization, so it bugs me to be sitting in a 0% checking.
« Last Edit: November 26, 2018, 05:25:58 PM by dustinst22 »

walkwalkwalk

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Re: Business Owners -- High Yield Checking?
« Reply #8 on: November 26, 2018, 05:27:17 PM »
My point was that is not the point of a business checking account. The point is to make you money in the way you do business.

HBFIRE

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Re: Business Owners -- High Yield Checking?
« Reply #9 on: November 26, 2018, 05:29:39 PM »
My point was that is not the point of a business checking account. The point is to make you money in the way you do business.

I understand this, but this isn't helpful to my question.  I'm looking to run business as usual with an account that will provide interest.  Since such a thing exists with personal checking accounts, I was inquiring if such an animal exists in the business world.  Will update after my discussion with Merrill Lynch next week.
« Last Edit: November 26, 2018, 05:32:53 PM by dustinst22 »

AlexMar

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Re: Business Owners -- High Yield Checking?
« Reply #10 on: November 26, 2018, 05:45:09 PM »
This sounds shockingly like my business.  Keep about $200k liquid and spend $5k+ on AdWords. Spark 2% card.... and Chase checking...

I don't think it's worth the effort screwing with your banking relationship over a pittance of checking account interest.  Seems to me like you are looking to solve a problem that doesn't really exist.

HBFIRE

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Re: Business Owners -- High Yield Checking?
« Reply #11 on: November 26, 2018, 09:59:10 PM »
Well I donít consider 5+ k a year that Iím not currently getting to be a pittance , thats like groceries for a year.
« Last Edit: November 27, 2018, 01:24:32 PM by dustinst22 »

EnjoyIt

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Re: Business Owners -- High Yield Checking?
« Reply #12 on: November 26, 2018, 10:09:55 PM »

Looks like I may have found a good business solution through Merrill Lynch @1.9x%.  Stay tuned, have a call with them when I get back home next week.

Please update this thread once you learn more info about Merrill Lynch.  It sounds too good to be true from a checking account. 

AlexMar

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Re: Business Owners -- High Yield Checking?
« Reply #13 on: November 27, 2018, 06:02:30 AM »
Well I donít consider 5+ k a year that Iím not currently getting to be a pittance

Are banks giving out 2.5%+ interest on business checking accounts?  Never seen it, but I'm open to it if you can point me in the right direction.

Even your own example would be about $1200/year.  $100/mo.  And that's providing you maintain the $200k at all times.  Yeah, that's ok but this is a business we are talking about.  One that obviously has revenue in the millions.  So to mess with banking relationships over $100/mo seems short sighted.
« Last Edit: November 27, 2018, 06:07:42 AM by AlexMar »

HBFIRE

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Re: Business Owners -- High Yield Checking?
« Reply #14 on: November 27, 2018, 11:41:29 AM »


Even your own example would be about $1200/year.  $100/mo.  And that's providing you maintain the $200k at all times.  Yeah, that's ok but this is a business we are talking about.  One that obviously has revenue in the millions.  So to mess with banking relationships over $100/mo seems short sighted.

As I mentioned, ML has a product at 1.97% currently.  We'll see if it's practical for my business needs, I'll update this thread after fully evaluating it.  I also have a call with Chase as my rep claims they have something similar, so will be comparing.  For me, this represents ~ 6+ K/year in interest (not sure how you derived $1200 there as its not close, even at a 200 K balance you're looking at ~ 4 K. ).  Our account ranges anywhere from 200-500 K on average through the year.  Avg balance is north of 300 K, so its a decent chunk of interest being lost (we keep the account loaded during 4th quarter to maximize our SEP contributions which is 4 contributions with business partner and spouses). That's why I'm looking into this.
« Last Edit: November 27, 2018, 02:25:30 PM by dustinst22 »

AlexMar

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Re: Business Owners -- High Yield Checking?
« Reply #15 on: November 28, 2018, 05:15:56 AM »


Even your own example would be about $1200/year.  $100/mo.  And that's providing you maintain the $200k at all times.  Yeah, that's ok but this is a business we are talking about.  One that obviously has revenue in the millions.  So to mess with banking relationships over $100/mo seems short sighted.

As I mentioned, ML has a product at 1.97% currently.  We'll see if it's practical for my business needs, I'll update this thread after fully evaluating it.  I also have a call with Chase as my rep claims they have something similar, so will be comparing.  For me, this represents ~ 6+ K/year in interest (not sure how you derived $1200 there as its not close, even at a 200 K balance you're looking at ~ 4 K. ).  Our account ranges anywhere from 200-500 K on average through the year.  Avg balance is north of 300 K, so its a decent chunk of interest being lost (we keep the account loaded during 4th quarter to maximize our SEP contributions which is 4 contributions with business partner and spouses). That's why I'm looking into this.

You mentioned America First Credit Union in your first post and suggested you keep about $200k in liquidity. 

Per America First rate schedule:  https://www.americafirst.com/documents/business-deposit-rate-fee.pdf

The High Yield checking for $200k accounts is .6% - which would come to about $1200/year or so.

I'm very curious what you find out about Chase, so yes, please update if you can.

HBFIRE

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Re: Business Owners -- High Yield Checking?
« Reply #16 on: December 04, 2018, 04:23:28 PM »
So a quick update on this -- essentially Chase, BofA (and other banks) have business Money Market mutual funds that you can tie to your business checking account.  The fees for these accounts vary and is what I'm now looking into.  Current rates are approx 1.97%.  Unfortunately you'd still need to transfer funds to your business account as needed as the checking can't pull directly from this account.  So it's a bit of a PITA for business usage.  That said, it's useful in the sense that it's also a business account that can be tied to your business checking so you keep everything in the proper account/s for tax purposes.  Even though this is not exactly what I was looking for, I may be able to stick 1-200 K in this and just transfer as needed. 
« Last Edit: December 04, 2018, 04:26:03 PM by dustinst22 »

AlexMar

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Re: Business Owners -- High Yield Checking?
« Reply #17 on: December 04, 2018, 04:31:30 PM »
Is it as simple as clicking "transfer" on the Chase site and is it an instant transfer?  If so, I'd probably consider putting $150k or so in the MM and transferring as needed.  If it's an instant transfer, then yeah, just a tiny bit of money management and I could see it worth making an extra $3k+ per year.

HBFIRE

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Re: Business Owners -- High Yield Checking?
« Reply #18 on: December 04, 2018, 05:01:49 PM »
With Chase, transfers take 3 days to clear.  Have a call with BoA later this week.  If I find an ideal solution I'll update here.


Heritage has a checking account that pays 3.3%.  Capped at 25 K, but apparently there is no issue with opening multiple accounts.  But it's a personal checking, not sure if it can be used for biz use.

AlexMar

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Re: Business Owners -- High Yield Checking?
« Reply #19 on: December 06, 2018, 07:18:11 AM »
With Chase, transfers take 3 days to clear.  Have a call with BoA later this week.  If I find an ideal solution I'll update here.


Heritage has a checking account that pays 3.3%.  Capped at 25 K, but apparently there is no issue with opening multiple accounts.  But it's a personal checking, not sure if it can be used for biz use.

That's what I figured.  It makes no sense to use the Chase account then.  You could put that money in any higher yield account anywhere and just transfer it as needed and manage your cash flow well enough that you can wait several days. You can get 2% all over the place.  To me, not worth it, but maybe in your case it's easier to manage the cash flow with your business.

But what seems clear is that we are really just talking about a business savings account and not a checking account with the flexibility you get with a checking.

Imma

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Re: Business Owners -- High Yield Checking?
« Reply #20 on: December 06, 2018, 07:42:57 AM »
With Chase, transfers take 3 days to clear.  Have a call with BoA later this week.  If I find an ideal solution I'll update here.


Heritage has a checking account that pays 3.3%.  Capped at 25 K, but apparently there is no issue with opening multiple accounts.  But it's a personal checking, not sure if it can be used for biz use.

That's what I figured.  It makes no sense to use the Chase account then.  You could put that money in any higher yield account anywhere and just transfer it as needed and manage your cash flow well enough that you can wait several days. You can get 2% all over the place.  To me, not worth it, but maybe in your case it's easier to manage the cash flow with your business.

But what seems clear is that we are really just talking about a business savings account and not a checking account with the flexibility you get with a checking.

If you open a savings account at the same bank as your checking account, don't you get instant transfers? I never have money in my checking accounts (private and business). It's all in a savings account until I need to spend it.

AlexMar

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Re: Business Owners -- High Yield Checking?
« Reply #21 on: December 06, 2018, 08:09:38 AM »
With Chase, transfers take 3 days to clear.  Have a call with BoA later this week.  If I find an ideal solution I'll update here.


Heritage has a checking account that pays 3.3%.  Capped at 25 K, but apparently there is no issue with opening multiple accounts.  But it's a personal checking, not sure if it can be used for biz use.

That's what I figured.  It makes no sense to use the Chase account then.  You could put that money in any higher yield account anywhere and just transfer it as needed and manage your cash flow well enough that you can wait several days. You can get 2% all over the place.  To me, not worth it, but maybe in your case it's easier to manage the cash flow with your business.

But what seems clear is that we are really just talking about a business savings account and not a checking account with the flexibility you get with a checking.

If you open a savings account at the same bank as your checking account, don't you get instant transfers? I never have money in my checking accounts (private and business). It's all in a savings account until I need to spend it.

Correct, however, the savings accounts aren't worth the horribly low interest at a bank like Chase.  But they do have higher yield accounts that don't transfer instantly.  And if they take days to transfer anyways, then there is no reason to use theirs vs other banks.

Arbitrage

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Re: Business Owners -- High Yield Checking?
« Reply #22 on: December 06, 2018, 09:00:53 AM »
DW just dealt with an issue like this - her company deals with very large sums of money compared to the company's revenue (basically holding on to client's cash for a short term before needing to make the necessary transfers).  She has been whipping the company's finances into shape, and transitioned from a model where they were mostly relying upon a credit line to one where they had positive numbers in the bank while waiting.  She saw it as a lost opportunity cost to be earning nothing on the money, and managed to find/negotiate a liquid account/arrangement earning a bit under 2%, varying with the Fed Funds rate, albeit with some fixed monthly fees.  I don't know the exact details, but those were the basics. 

HBFIRE

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Re: Business Owners -- High Yield Checking?
« Reply #23 on: December 06, 2018, 03:13:29 PM »


Correct, however, the savings accounts aren't worth the horribly low interest at a bank like Chase.  But they do have higher yield accounts that don't transfer instantly.  And if they take days to transfer anyways, then there is no reason to use theirs vs other banks.

Yeah, there's gotta be a bank that has a business checking + a decent savings rate account that allows for instant transfers.  Maybe Alliant Credit Union?  The delay in transfer is a no-go for me as well.  Alliant has .65% checking and 2.00 % savings.  This might be a fantastic combo, if it can be used for business.  I love Alliant's credit card (3% cash back first year and 2.5% after), so already have a relationship with them.  Their savings account adjusts and stays competitive with the top ones like Ally.  I'll update everyone what I find out here.
« Last Edit: December 06, 2018, 03:30:29 PM by dustinst22 »