Getting Control of Your Cash
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Most brokerage firms offer central asset accounts (also called asset management accounts) — combining checking, investing, and borrowing in a single account. The advantages of such accounts are described in relation to cash management issues that most small businesses face.
When it comes to cash management, do any of the following scenarios sound familiar to you as a business owner?- You keep as much money as possible in the checking account, because you don't know how much cash you may need at any particular time to cover your expenses, and you don't want to come up short.
- Your investment strategy is to deposit cash and checks into the checking account until you save enough to write a check for deposit into a money market fund, CD or Treasury bill.
- Your method of borrowing is to estimate how much you'll need for equipment, cash flow and other special needs, then tack on several thousand dollars extra, for good measure, each time you present a loan request.
- Come payroll or tax time, you withdraw money from your money market account and deposit it into your checking account, allowing a few days for the transfer and another few days to make sure your check arrives by your filing date.
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