If In Default, Change Banks And Accounts Today
We all know small business owners are under enormous cash flow pressure. Rapidly declining revenues are causing normally solid businesses to experience cash management issues they may be unprepared to effectively navigate. Take heed – the following advice may be important to your survival.
You MUST take control of your cash flow. This requires you to be able to determine who you will pay and when you will pay them. This further means you may be required to NOT pay debt service when due or even at all. Should you be forced into this situation it requires some additional adjustments to regain control of your cash flow and support your decisions as to whom you pay and when.
First, clean out your bank accounts and create new accounts at a different bank! Your current bank, to whom you also probably owe money for previous loans, may decide to sweep your accounts and remove what cash is there if you are confronting payment default. This will also cause whatever checks are floating to bounce which puts even more pressure on your cash flow.
They have the right and power to do this. Merely changing accounts yet remaining in the same bank is not adequate. Change banks and accounts.
Many small business owners have subscribed to automatic withdrawals from their accounts; this is very difficult to shut off and takes time. The answer may be to simply remove cash from the account so there is nothing to transfer and then reopen new accounts elsewhere.
While payroll accounts should be immune from such sweeping, frequently payroll accounts are not clearly identified and thus are also subject to sweeping. This may be undone but it takes time and effort so it’s better to avoid the issue altogether.
Other issues that may arise? Joint accounts for your children are unprotected if your name is on the account. If you have such trust accounts or joint accounts, either remove them to other banks or remove your name as joint trustee or joint owner in any way. If you don’t, it is deemed your money and thus liable for your debts and the potential sweeping by the banks.
You must protect your resources and that means your cash. You must be able to determine who you pay and when. Remove your cash from harm’s way, it is crucial to your survival.
