Comment by dylan604
6 months ago
This reminds me of a company in town that was known for doing the precise thing of putting money into separate accounts, specifically, CDs. It was the type of service where 50% was paid up front, 25% at specified milestone, remaining 25% at completion. So the company would receive the 50% and place a large chunk of that into a CD. There were lots of reasons, but my favorite was the excuse of it covers when someone fails to pay the last 25%. These were the types of jobs that could easily last 6-12 months. Lots of people had mixed feelings about this, but at least it wasn't paying for office renovations or the owner's car payments, etc.
CD = Certificate of deposit, a bank account in the United States with a fixed maturity date. (I assume.) https://en.wikipedia.org/wiki/Certificate_of_deposit
> covers when someone fails to pay the last 25%
Could it have been that they could use that "reserved" money to pay people's salaries, if the client stopped paying? Then in a way it would have covered? although badly phrased maybe