Electronic payments common sense
Do you have a payroll, investment, or insurance company pull tax payments, employee wages, investment funds, or insurance payments from your corporate bank account? Instead, set up an interest-bearing subsidiary account with your bank & transfer funds from your master account to the subsidiary before the payment due date.
Mistakes or fraud could wipe you out if your master account is drained. Fraud – technology is out there for thieves to wash the ink or toner off a check and to replace it with a much larger number. A half million dollar check might just clear your master account, but will bounce in a subsidiary. A bounced big check draws law enforcement faster than a cleared check.
Mistakes – you change insurance policies but forget to tell the previous company to stop collections. A computer crashes and restarts at the beginning of a client-withdrawal cycle. Mistakes are endless, but having a subsidiary account prevents serious damage. A double charge will not be collected.
Often payments are not due the date of funds deposit. Investment funds often have a 30 day window, payroll taxes may be accruing for 60 or 90 days before being due. By having the funds in an interest bearing subsidiary account, payments are reserved, visible, and cooking interest.
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