T plus 1 equals A

As my blog stands for Practical Cash Management, first blog posting title should be a bit easier to understand than it is now. But as we are only few days away from the first real SEPA implementations, I have been thinking what not to say to my customers (and what is good to say) and what to do when thinking their bank accounts in different banks.

One of the biggest selling arguments for SEPA is the need for only one bank account. This brilliant idea is really important for any company, if practicing business in Europe. In a paper, this idea makes sense. But if money transaction takes time more than a day and interest rate is paid on value date, there is still need for more than one account. Managing money is not fast as it could be.

In the era of e-mails and fast communication tools like MSN Messenger, more youngster step in the world of banking wondering why normal message is send to receiver in nanoseconds, but money transfer takes place several days. Even when arguing the intra day flow- benefits doesn't make sense to them.  

So what this title says in practice. It might make sense for companies even think to have only one account, only when money transfer takes place in less than one day.  Otherwise is better to have several accounts in different banks and require good interest rate paid on every account. My formula stands T as today, + 1 stands next day, where ≈ A stands for reasons why to have only one account. Otherwise if your formula is something else, have several bank accounts.