Sometimes it makes sense for small, fast-growing companies to mimic the financial practices of large corporations -- and sometimes it doesn't.
Take controlled-disbursement accounts, which large companies have been using for about a decade. "The concept is simple," says Jim Sagner, a partner in Sagner/Marks, a treasury consulting firm in West Orange, N.J. "Banks that offer these accounts can tell corporate clients by 10 or 10:30 a.m. exactly how much they'll need to cover all the checks that will clear that day. Since other banks clear deposits all day long, their corporate customers need to keep more on daily deposit in order to avoid bouncing checks."
Sounds great, right? To make these accounts even more enticing, big banks, which are battling enormous overcapacity in the marketplace, actively seek small companies as clients. But according to Sagner, controlled-disbursement accounts are often too pricey to make sense for most small companies. "There's usually a $50 to $100 fee for account maintenance, as well as extra fees, like 20¢ to 30¢ for each presented check, electronic-fund-transfer charges as money moves between accounts, and so on," he says.
A better plan for small companies, Sagner suggests, might be to "keep your costs down by arranging a simpler sweep arrangement between a money-market account and a checking account that are both located at the same bank." Of course, those accounts also have charges, and Sagner says it makes sense to check out both types of service before making a decision. Many small banks are starting to tap into the small-business environment, and they may offer surprisingly good deals on controlled-disbursement accounts.