
Ask HN: Which banks do large companies use? - paulkon
Do companies with large revenues diversify among the top banks?<p>How do they decide how much to allocate to their account(s)?<p>Is money easily moved around? Are there multiple signatories?
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davismwfl
I am sure others know more than I do on details, but I have seen into the
belly of the beast a few times during consulting projects for Fortune 500
firms, a few Top 10 even. I've consulted in everything from the startup down
to their last $100 in the bank to GE, Fidelity, Phillips, Ford, Toyota etc.

Yes, they generally spread across many banks, many accounts and even nations.
Generally after $50M in revenue and for sure after $100M they cease having
"standard" accounts like SMB's have. Honestly, most banks once you cross even
the 10-20M annually will customize accounts for you almost anyway you want.
Smaller the bank you use the smaller the revenue before they customize. Also
insurance gets interesting insuring large sums of money too.

Allocations are handled via discussions with the banks, outside advisor groups
and electronic systems. Usually the CFO of large organizations will employ a
staff that literally manages investments and they will differ from the people
managing daily/monthly/quarterly cash flow. There are literally teams of
people that work internally and with banks, accounting firms, attorneys and
other consultants to figure out the right allocation and distribution. It also
gets super complex because of tax laws, international transactions,
international revenue etc. So there are teams of people usually managing this
not just one or two people. In one of the largest public firms I was at they
had about 100 people that did nothing but manage investments and allocation,
that team worked with the cash flow team on a quarterly basis and with the M&A
team as necessary.

Signatory is not handled the same way as you would see in a SMB either, where
you can say two people have to sign every check etc. In most large
organizations everything is managed via the back office finance systems which
will digitally sign everything, handle ACH/wire transfers etc. And those
systems have built in purchase limits for different levels of approvals etc. I
have seen where an ESVP could spend $5M in one transaction basically
unquestioned, but the reality is they'd never really do that without
discussions. But it is there so they could make emergency purchases of
equipment, supplies etc without need to have delays in the system. I even saw
where the Admin Assistant for one of the CEOs I worked for had purchase
approval of up to $50k a month, just to handle incidentals, travel, meetings,
food etc without having unnecessary headaches put in her way.

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stevenjgarner
A growing national business with $12M + annual cash flows (still technically a
small business, so probably not relevant). We worked through small local
midwestern banks, but found the larger banks (e.g. Wells Fargo) and American
Express were necessary to get required US services (credit lines, commercial
paper, credit card expense reporting etc). American Express has been a
pleasant surprise as much of our cost of doing business is paid that way, for
which we get (valuable) points/perks. Something I think not enough businesses
use.

Larger banks also seem to make it easier to remove personal guarantees on
credit facilities as tbe company grows. As for how much to allocate to each
account, most banks provide a sweep service if balances are large enough where
the balance of each account is sweeped nightly into a money market account,
and then restored the next day, Otherwise you just need to maintain balances
in each bank account in support of your cash flow projections.

As for international finance, I have found that foreign banks (e.g. ANZ
Banking Group, Royal Bank of Canada) are much better with transfers and moving
money around than US banks (as they are not stymied by the Federal Reserve and
the Fed Payments System). Do not overlook Bitcoin either.

Where small local banks shine for us is through their trust departments.
Larger banks tend to have trust products and packages for "wealth management"
into which funds are dubiously recruited, while with small trust companies,
you can engineer boutique situations (e.g. where fiscal instruments such as
securities and time deposits can be held as collateral but still traded on the
open market under a trust account). Befriend a small bank trust officer!

Transfer of large amounts of money between banks in the US is still very much
a credit transaction - availability of funds are determined by the credit of
the parties to the transaction. New companies with large transfers even
between large banks will get restricted funds availability, until credit
develops. Working with larger banks, it is much easier to establish funds
availability in conjunction with a more holistic credit picture.

I'm sure for legitimately large corporations, there is a need to diversify
among the top 13 banks, especially for national businesses (e.g. not even
Wells Fargo is in Missouri or Oklahoma). We have found there effectively are
NO national banks in the USA present in all states (we have personnel in all
the lower 48). As in politics - when you're small you are either Democratic or
Republican. When your large it is necessary to contribute equally to both. I
think the same is true of banks - a business of $100M or more would want to
diversify even if just for risk management.

I agree with @davismwfl that you need to construct a banking relationship
around your systems.

