Given all that small business have had to face in the last couple of years, it may seem a strange time to question the location of any cash you may have in the business.

Surely that’s way down the list of things to consider?

Actually, no! There are quite a few businesses out there who are sitting on more cash than is usual.

Here’s why:

• Bounce Back loans were taken out in the depths of lockdown, when there was no indication of how long the closures would last.
• Coronavirus Business Interruption Loans (CBILS) were for businesses who could borrow more than the Bounce Back Loan limit of £50,000, and many grabbed at them, for the same reasons.
• Pent up demand from consumers who couldn’t spend for months has seen many businesses busier over the last few months than is usual. Continuing restrictions have meant people can’t get away for their usual holidays, they’ve been watching their current account balances rising, and have found alternative ways to spend!
• Some businesses have used the last eighteen months to drastically review their costs, and their staffing, and they are now seeing the benefits of those efficiencies in increased profitability.

All of the above means that there are businesses out there who are sitting on cash, and it’s important that if that applies to you, you ensure your cash is in a safe place!

And if you’re not sitting on lots of cash, that’s even more reason to look after what you have!

A few minutes spent to check you’re not at risk could be hugely beneficial.

What is The Financial Services Compensation Scheme?

The Financial Services Compensation Scheme (FSCS) automatically protects account holders up to £85,000 per bank, building society or credit union.

Using different banks may not help…

Be aware that some banks trade under different names, so your balance is only guaranteed by the FSCS if it is below the £85,000 limit across ALL of those trading styles.

For example, if you have accounts with Clydesdale Bank PLC, your accounts with Clydesdale Bank, Yorkshire Bank and Virgin Money need to have less than £85,000 IN TOTAL for all of your funds to be guaranteed.

Are you inadvertently using more than one bank in a group?

BEWARE the Joint Account trap

The scheme limit of £85,000 applies to each depositor, so the limit usually just doubles. For some joint accounts though, this doesn’t apply.

If two or more people are entitled as members of a business partnership, association or grouping of a similar nature, without legal personality, are treated as if they were made by a single depositor, and the limit remains at £85,000.

If you’re unsure whether your funds would be covered by the scheme, we would always advise that you speak either to your bank / building society, or directly to the FSCS.

You can find more details on the FSCS Website.