Is the Sky Really Falling? 5 Ways to Protect Your Business During Bank Failures
Recent bank failures, such as the downfall of Silicon Valley Bank, have shaken business owners across the country. With $210 billion in assets, how could a bank fall so quickly? This has left many wondering how to protect their businesses during such turbulent times. Here are five strategies to safeguard your business during bank failures.
- Diversify Your Banking
Relying on a single institution for all your banking needs can be risky. Be aware of the $250K FDIC insurance limit and maintain accounts at multiple banks. This ensures you have access to funds even if your primary bank fails. Think of this as your business’s emergency fund.
- Conduct Regular Due Diligence on Your Bank
Regularly check your bank’s financial health by reviewing their earnings reports and share prices. Utilize resources like Moodys and Fitch to stay informed. If your bank shows signs of instability, it might be time to switch to a more secure institution.
- Leverage Outside Funding
Having alternative funding options can be crucial during tough times. Maintain a business credit card and a line of credit for quick cash infusions. Factoring receivables for slow-moving items can also provide additional liquidity.
- Forecast Cash Flow Weekly
Monitoring your cash flow on a weekly basis is vital. Hold regular meetings with management to ensure everyone is aligned with the cash flow status and future projections. Leveraging auto-pay capabilities can provide greater transparency into cash outflows.
- Allocate Incoming Revenue Among Several Banks
Distribute your incoming revenue streams across multiple banks to reduce risk. This ensures that not all your funds are tied up in one institution, providing greater security and flexibility.
By implementing these safeguards, you can minimize disruptions and ensure business continuity during bank failures. For tailored solutions, reach out to Joseph Management Inc. and learn how to navigate these uncertain times.