Banking

I deal with a lot of banks, well over 2 dozen on a regular basis. That means there are some I like and others I don’t.

It is pretty easy to guess which ones don’t work well.

• Bank of America

• Wells Fargo

•Chase (not as bad)

But why-

They are clunky, and don’t play nice with software. They make it hard for you as a client to find what you are looking for, and they make it hard to get customer support. Then they never give you a fair return on your money sitting in the bank.

Which banks do I recommend?

•Relay

•Mercury

•Local Banks/Credit Unions

But why-

Relay and Mercury are fin-tech banks. They are more risky, even if they are FDIC insured. The big key is they are built for modern purposes. I usually recommend operating funds in Mercury or Relay.

But keep your savings and extra money in a local bank, because they have people you can talk to very easily. And more importantly they will help you earn money on your money.

Talk to a local bank or credit union about getting your 2-3 months of business operated savings into mutual funds or high yield savings account. You will benefit long term. And if you ever need a loan the local banks are amazingly helpful.

TODAY’S ACCOUNTING TIP

Life Time Value of a Client

Life time value or LTV of a client is one of the levers you can pull as a business owner.

LTV = Average ticket x gross margin %

If we assume one product or service sold on average is $200, and your gross margin percent (revenue - cost of goods sold) 50%. For that month you would have LTV = 200 × 50% = $100.

This can allow you to review and make sure you are not spending more than you can afford on marketing, or paying too much for overhead.