22 Nov Large Non-Interest Bearing Balances
Large Non-Interest Bearing Balances
Any excess balances should be working for the business, not just sitting in a non-interest bearing account. Several ways to accomplish this include: a sweep account (each night the bank automatically transfers excess funds into an interest bearing account then the next day the necessary funds are transferred back to the account for checks that will clear), or some type of investment. The later will typically generate more interest income based on the fact that the funds are either uninsured or unavailable without payment of a penalty. There are too many alternatives to list. The best alternative is to talk to the bank (who will look at the account balances and activity) for a recommendation on what is best in the particular situation for the business.
Banks do not typically advise business customers of various alternatives appropriate for them without being asked.
If accounts typically carry large balances, there may be additional services the bank will provide to the business at no charge. For example, a courier to pick up bank deposits once or twice a week, free check or deposit slip printing, sorting of checks in numerical order prior to sending with the bank statement, etc.