-
Posts
-
For most people banks are something they get there benefits or wages paid into, they paid there direct debits and use there cash machines.
For people in business its much the same but the amounts are much higher.
My business passes about 200k a month thru the banking system. Its the day to day stuff like paying suppliers and customer/wages payments. I don’t use bank loans or over drafts to run my business like some do.
The problem anyone in business faced this week was “if the bank failed”.
There no insurance or treasury fund for amounts over 50k, so if our current bank fails, we fail too.
We just can’t stop using the banks, we need them for customer payments and accountancies reasons.
Banking confidence is something we are all looking at, we can’t afford to use a bank that may fail, there no government bail out funds for small businesses that go out of business or fail the same way has the banks did this week.
My accountants yesterday told me we had to spread the “risk”…… the problem is that so many banks are now owned by the same people and we are only cover by 50k per bank.
I’m not too sure how we are going to deal with this problem, there is no simple answer but I do know one thing:
Putting your money in a bank is like giving it to your mum, she should be OK with it, but you never know if she’s going to say f u ck it and f u ck off to Las Vegas and blow the lot.
It’s worse than you think DOA …. the £50K Government “guarantee” only applies to private individuals.
As you are a business the “guarantee” doesn’t apply to any monies that you may have in the bank.
Why not beat the Liquidator and eff off to Las Vagas and enjoy the money whilst you can.
You know what really pissies me off, that you work hard, build up a business and a prat at your local bank kicks you in the nuts and steals the f u c k ing lot and there fu c k all you can do about it.
We did tackle the problem of “£50K Government guarantee ” when Northan Rock failed.
We are covered for his now but it will take a while to claim the money back.
I would take PB’s advice if I thought the travellers cheques issued by my bank would be still valid and worth something when I got there
Lots of ‘savers’ are taking their money off deposit (with the banks etc) and putting in into government securities. You can buy them through the National Savings:
OK you don’t get as high a rate of interest as you would with say an Icelandic bank ( :lol: :lol: ) but at least your hard earned cash is secure and you can get it out at any time.
For businesses, I would suggest that you keep a ”float” in your business current account to settle all the various charges, direct debits, and payments out and whenever you receive payments in from your customers, you transfer the excess over the ”float” level on a daily basis into the N&S account.
This by the way DOA is called efficient cash management.
Errr Pb that’s what we have been doing for years, but a current account is at the same risk has a saving account.
And that’s the problem day to day payments are handle thru a businesses current account and if the bank fails, all the money is losted.
Yes I quite understand this. But you have to minimise your day to day current account balance, so as to reduce any risk of the Bank’s default.
Of course you need a current account in order to operate the business. Hovever with careful cash management, your exposure to risk ought to be absolutely minimal and therefore not represent a significant risk to the business.
Most clearing banks operate an automatic ”overnight” balance transfer system. This transfers the excess balance (over a pre-agreed minimum) to a nominated deposit account and then transfers it back again the next day.
Thus not only are your retained cash balances protected, but you also earn a few bob in interest over time.
Oh God
Pb yesterday by lads did 15k of work, that’s 15k being paid in my cash, credit cards and cheques. They all have to go thru a bank.
Our “float” is set at 25k
The money is move at the of each day to other accounts with different accounts with different banks, but this does take 3 working days.
So if the bank who is holding our days takings fails, and the bank we have just sent out excess to fails, we are f u c ked.
Because we can’t get our money, our suppliers can’t be paid so they are fu c ked too.
So in the worst case, we could be holding funds for a new project in an account and the bank fails. Its normal for us to keep a min 100k just for new projects or expensive.
I need the money on a flexible account so it can be used, not locked a away for 30 days in N&S.
The problem is that all of the money in our bank accounts is now at high risk, in what should be zero risk accounts.
Does that make any sence to you Pb?
Its a made up word like “credit crunch” or “global warming” just sounds better than “we fecked up with your money”
Quite honestly DOA, no it doesn’t kake sense to me.
Judging by your comment that your lads generated some £15K in a day, that makes your annual turnover somewhere in the region of £4 million.
Keeping a ”float” of £25K on an ‘in and out’ basis in your current account is therefore way too high IMO. You can adjust this by scheduling twice a month payment runs to your suppliers (or better still monthly payment runs). By preparing each run in advance, and adding in the ”other” payments that you need to make regularly (salaries; NI; rent; rates and so on) you should be able to predict several days in advance exactly how much cash is going out on the next run.
It isn’t rocket science to calculate how much NEEDS to be in your current account to deal with this on a day to day basis (even allowing for electronic clearing times). In most cases a simple Excel spreadsheet will do the trick. The key is to be totally disciplined in setting up the payment runs and NOT allowing yourself to make interim payments, except perhaps in an emergency.
Redicing your current account daily closing balance in this way will dramatically reduce the risk you are exposed to AND may well earn you more interest than you currently receive.
Well turn over is a bit more than 4 million pb. But turn over is not the same has profit.
And we do have to buy a lot of parts like new heating systems (£1k and up), kitchens (7k and up) and bathrooms (5k and up). We get better deals if we pay by “cash” and increase our profit margins.
So if we fit 3 new bathrooms and 2 kitchens and a new boiler in a week, we pay out about 45k in parts.
I’ve one job on right now in Bournemouth that’s costing 25k a week in agentice wages alone and and another 10k in parts.
But things like diesel, tools and wages need to be paid for each week. I don’t run anything on credit, its a bad move to do it and always leads to trouble.
Our business cash needs are variable, not fixed. We install, service and repair, not manufacturer anything.
The problem is simple, we can’t trust our banks to stay in business longer enuth for us pay our suppliers or handle our day to day stuff. Any money on deposit can be “lost” at any time.
The accountants are working on the problem, there worried, I’m worried and for good reason.
Get involved in this discussion! Log in or register now to have your say!