

Ask HN: Best practices for startup banking - AndrewKemendo

This may sounds silly but after talking with our accountant and other startup CEOs it seems like it is common practice for companies to keep 6+ figures of cash in their checking accounts.<p>Long ago when I opened my first private checking account with a debit card, my bank gave me some &quot;best practices&quot; for use. For example only keeping a few thousand dollars in checking as that account is of course most vulnerable to fraud. Seems like a good rule for companies as well.<p>I am curious what other startups are doing for best practices for their banking. I know for us, our funding was high enough, and our burn rate is low enough that we don&#x27;t need to keep most of our cash that available. For example are there companies putting sums that they wont need for a few months into short term (3 month) secure vehicles like CDs?
======
zaroth
1) Ensure the full amount is federally insured. 2) Verify requirements from
the bank to relieve yourself of any liability should funds go missing, i.e.
2-factor, strong passwords, dedicated terminal for accessing the account.

Businesses do not get the same protections as consumers. For example, if your
laptop gets malware and they steal your corporate banking password and
transfer out your money, you could be on the hook for it depending on how your
agreement with the bank is written.

3) I don't see any reason to keep more cash in the high traffic account than
is needed to clear the checks coming out of it.

4) Have a clearly defined policy on who can transfer how much and to whom. Do
not depend on this policy to save you if more is taken than is authorized, but
it might help in court.

5) Treasuries, sure. CDs? I'd want a Board resolution authorizing it, and
again keep it under the FDIC limit. I think the biggest risk factor comes down
to liquidity. Of course, slightly illiquid funds are also _perhaps_ harder to
steal?

[1] - [http://krebsonsecurity.com/2015/03/hospital-sues-bank-of-
ame...](http://krebsonsecurity.com/2015/03/hospital-sues-bank-of-america-over-
million-dollar-cyberheist/)

------
cauterized
Also note that best practices for a company may not match those for an
individual. You may need to have a LOT more in checking at a given time
because you need to meet payroll and office and server rent every month.

Currently, too, interest rates on any investments safe enough to park money
you'll need within 6 months are so low that they probably don't pay for the
time you spend shuffling that money around and worrying about it. As a funded
founder, your most limiting resources are time and head space. Let it go and
spent your energy worrying about something that will have a much bigger impact
on how muc money you have in the bank 18 months from now.

------
relaunched
Zaroth has really good practical advice, but regardless of how much you have
in the bank, I'd caution against doing anything too creative with the money.
Investors aren't looking to make half a point on their money and they aren't
giving you money to invest anywhere else. It's a good idea to make sure your
money is secure and you aren't being negligent in your cash management
practices, but I don't suspect your board will be impressed if you come up
with a fancy scheme to make investment returns on the money they gave you to
run your business.

