Is Your Business Cash At Risk?

Is your business cash at risk? In short, yes if you have more than £85,000 in a bank account. It makes sense to spread the risk across separate unrelated deposit accounts with FSCS protection.

The Financial Services Compensation Scheme (FSCS)

The Financial Services Compensation Scheme (FSCS) only protects £85,000 of the money in a bank account, which means any sums over and above that amount are at risk in the event of another banking failure such as the 2007-08 “credit crunch”, for example.

Despite cyber security protocols and your best efforts to remain vigilant there is always a significant risk of your bank account being hacked by fraudsters.

Multiple accounts with the same bank would still only receive £85,000 total compensation if the bank failed or the accounts were looted.

It makes sense therefore to reduce these risks by spreading them across separate unrelated deposit accounts with FSCS protection.

Business Savings Accounts

Business savings accounts have higher interest rates than business current accounts, and will offer a better return on any surplus cash your business may have.

There are three kinds of business savings accounts most likely to be suitable –

Is your business cash at risk? In short, yes if you have more than £85,000 in a bank account. It makes sense to spread the risk across separate unrelated deposit accounts with FSCS protection. There are three kinds of business savings accounts likely to be suitable.
Information courtesy of Moneyfacts.co.uk

Whichever one you choose will depend on your business needs.  

Business Easy Access Savings Accounts allow instant access to your funds in case of an emergency. 

Business Notice Savings Accounts will require you to give notice to your provider before you can make a withdrawal, as you will lose interest otherwise.  

Whilst the interest rates on both of the above types are normally better than you would get from a current account, the banks can change these rates at any time.  

Business Savings Bonds are a lot less flexible than their variable rate counterparts, but the rates are often better and guaranteed for the fixed term (typically one to five years). 

If you have enough surplus cash you could open one of each type of account for use in the short, medium, and long term. 

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