The ‘how and why’ of money management

Ensuring Business as Usual: Lucas Fettes

Cuts to interest rates continue to be the trend as far as monetary policy is concerned. While not guaranteed to continue, this, paired with the fact that it can be difficult to manually spread funds in a way which keeps your business’s cash reserves safe, means now could be the time to consider a cash management solution.

Arduous processes

It is common for businesses to struggle to attain the most attractive savings rates directly via mainstream banks. Even when attractive rates are found, the processes your business is forced to contend with are often complex due to the enhanced due diligence and strict anti-money-laundering measures banks impose every time you open an account. This creates a situation where switching or transferring funds across bank accounts becomes demanding.

Many businesses have, therefore, become stuck in a state of inactivity, instead of spreading their reserves to achieve the best rates. Given banks have failed in the past, this may not be best practice if you wish to keep your cash reserves protected. Regulated accounts with the Financial Services Compensation Scheme (FSCS) are generally protected up to £85,000 for UK businesses, which may not cover the entirety of your funds (please note that credit institutions, financial institutions, and investment firms do not usually qualify for the FSCS as deposits).

How can a cash management platform help?

Thanks to innovation in the fintech space, there are now a range of cash management platforms that can help your business find attractive savings rates and distribute your cash reserves in a suitable manner.

These advancements make it possible to register via a single platform and browse competitive rates from a range of banks. Importantly, there is no need to complete separate applications for each bank account. Instead, once you have signed up via the platform, this application is used for subsequent accounts.

You can then access each of the accounts you hold, giving you full control over how your business’s funds are spread and facilitate deposits or withdrawals at your convenience. As your funds are deposited via UK regulated banks, each of your accounts will be covered by the FSCS making it easier to keep balances within compensation limits.

While these new platforms offer a convenient and streamlined solution, any arrangements you put in place need to be suitable for your business, so do ensure you consider your business’s immediate and future cashflow needs.

At Lucas Fettes, we have a preferred cash management platform that we recommend to our clients. To find out more, get in touch today.

Lucas Fettes Financial Planning® is a registered trading name of Lucas Fettes & Partners (Financial Services) Limited and is authorised and regulated by the Financial Conduct Authority.