News Flash: Merchant Banks Seize Small Business Cash

Cash Vanishes from Merchants' Accounts

Citing the increased risk of bankruptcy, credit-card processors are increasingly demanding—or simply seizing—cash reserves from entrepreneurs

If you're a small business owner or CFO that processes credit cards, I recommend that you review the BusinessWeek Online article, then check with your merchant bank and processor to ensure that you don't wind up in a cash flow crunch. To be surprised with an account drain is the last thing you need with tightening credit and slow receiveables.

One thought on how to protect your funds: Use a separate checking account for your merchant account funds, then transfer them to your main account later.

Another option: Use a service like PayPal to handle transactions from a major new initiative that might dramatically increase the volume of your credit card transactions.