Show HN: cash flow for freelancers and small businesses [retry]
wisecashhq.com
wisecashhq.com
How? And at what interest rates? I find this to be a very, very, annoying thing to do. You end up piling money in your bank account that just stays there. I think lending for me would be great, both to banks and corporations, but this market is not as easy to access as stocks.
- you start to build a reasonably accurate situation by entering your data
- once this is done, you can determine how much money and how long you could use for investments, without going to $0 (you can use the burn down chart, see the screencast, with your current bank account balance to determine that)
- you can also alter your situation to add or tweak income and see if you can afford that investment from a cash flow point of view
The key thing is what to invest in!
You should look for 100% no risk investments that also let you retrieve part or all of your money in a day or two.
In France (where I'm from) we have what is called "Comptes dépôts à terme" which present exactly those characteristics. I think that the equivalent in the US is Certificates of Deposit, but then not all offer the same guaranties, so take informed advice!
In my case, I subscribe to "Comptes dépôts à terme" at the Credit Agricole bank. You can lend a specific amount of money for a predetermined period of time.
I have a 7 years DAT account, which provides an average (over the 7 years) of 2.5% (first year is at 1%, last year is at 5%, to encourage you to leave the money here).
So this means roughly €250 of interest on average per year, for €10,000 invested.
But be super careful: verify the characteristics of your investments, of course.
In my case there is zero risk, and I can get back the money by small bits, in 24 hours, so this does not put my company at risk and I can finetune with WiseCash.
Hope this helps!
Ping me at support@wisecashhq.com if you want to discuss that in more depth!
Certificates of Deposits (CDs) are issued by banks. They're insured by the federal government against loss, up to a large enough number such that the typical freelancer or small consultancy would expect to never lose a penny of principal. Unfortunately, they're very poor for holding cash for freelancers/small businesses: 1) Interest rates are currently terrible virtually everywhere. 2) CDs have a duration, set in advance. 3 months, 6 months, 12 months, 5 years, etc etc. You can typically redeem them early, essentially at-will, but will pay a penalty to do so.
The option which you probably want to recommend to American freelancers/small businesses is called a "money market fund." It is a demand account, held at a financial institution, from the perspective of the customer. You can get money out of it essentially instantaneously. The money market fund invests in short-term debt, and historically they're very, very good about not losing principal. (One lost principal -- "broke the buck" -- as a result of a municipal bankruptcy in the 90s, and one other threatened to break the buck during the financial crisis.) The federal government treats money market funds as systemically important, so these days they're also explicitly federally backed (and implicitly backed by the fund sponsor).
MMF interest rates in the United States are currently also very low -- 0.5% yearly would be a pretty representative rate at the moment.
The best reasons for good cash management in the current interest rate environment are a) peace of mind, b) avoiding having to borrow money at credit card interest rates (typically the only credit source available to very small businesses in the US), and c) sometimes you can pre-pay vendors for things on terms which are scandalously good relative to short-term investment opportunities. For example, when I have a few thousand dollars burning a hole in my pocket, pre-paying a SaaS vendor often locks in a 10 to 20% APR-ified discount.
Note that the main point of the app is to do financial planning / forecasting and the associated benefits (eg: being able to avoid a crash on your bank account, setting your pace with regard to freelancing, negotiating, making extra time for open-source, holidays or building a SaaS, etc) - being able to invest is just a nice side-effect, and should be done very carefully.
Thanks again!
Of course at some point you will want to withdraw some dividends and then you have money sitting in the bank account again. But I see this is more of a problem of personal finance than anything. It just sucks that nothing good is out there working for everybody and not so country specific.