Bank Management

Operating bank accounts

Maintain two operating accounts at two different institutions.*

1. Primary account: Designated for day-to-day activities. This is where you sync up your finance systems like payroll, bill pay, subscription collection for incoming cash receipts, etc.

2. Backup account: Designated for emergency situations. Your backup account should be held at a different bank from your primary account.

• Secondary Emergency Funds Account: This is a backup account that can hold up to a $250,000 balance through the company’s Corporate Card provider.

Do not keep excess cash in your operating accounts.

Select operating account partners based on your business needs. For example, do you need foreign currency exchange, run ACH at scale, a line of credit? Make sure the selected banks can serve your business needs effectively.

Never agree to a 100% exclusive relationship with a single bank.

*Certain FinTech platforms are not banks themselves. It’s critical to select platforms that partner with FDIC-insured banks.

Daily sweep accounts

Set up a sweep money market account. Recommendation is to keep 3-6 months of liquidity needs among operating and sweep accounts.

Money market accounts are most commonly structured one of two ways:

1. Accounts with nightly sweep features across a network of other banks, which provide higher FDIC insurance coverage than the standard $250,000 per bank per depositor limit.

2. Accounts that stay on the bank's balance sheet, which count towards the same $250,000 FDIC insurance limit in combination with your checking account.

Example:

ㅤ	“On Balance Sheet” Money Market	FDIC Insurance Coverage	“Sweep Account” (with four 3rd-party banks, for example)	FDIC Insurance Coverage
Checking	$500,000	ㅤ	$500,000	$250,000
Money Market	$1,500,000	ㅤ	$1,500,000	$1,000,000 ($250,000 x 4)
Total	$2,000,000	$250,000	$2,000,000	$1,250,000

If you’re setting up multiple sweep accounts with different institutions, pay attention to the network of banks they use. FDIC insurance limit applies to per bank per depositor (identified by the same EIN).

If you have material excess cash (for example, >$10M outside of operating and sweep accounts), open a managed securities account (see below).

Professionally managed securities account

Applicable to companies who have raised external funding. Generally not applicable to pre-Seed companies.

Appoint an asset management team (or corporate cash management) to manage a portfolio of very short-term, highly liquid, US government securities. These types of accounts require a management fee. Simliar to a brokerage account, the securities are held at a custodian (a third-party institution in your company’s name), not the bank’s name.

Focus the policy on capital preservation and liquidity, not higher yields that are more risky and can jeopardize the business.

The Board of Directors need to approve a treasury mandate under which the funds are managed.

Signatories

Each account should have more than one signatory on file who can act and sign on behalf of the company. OCV will be a primary account holder in addition to Company Executives for pre-Seed companies.

Once a company raises an external round, signatories will be updated to Company executives only. Make sure there are multiple signatories for each account and set up approval rights appropriately.

Wire approvals and controls

All wire transfers out require at least one level of approval by a Company representative. Typically, the Accounting and Finance Team initiates the wire transfer and management approves.

Consider setting up two approvers for wire amounts above a certain limit.