Business Cash Deposits
Discussion
Right couple of questions for business people:
1) If you have a surplus of cash in your business how much do you value the rate you receive on deposits?
2) Where would you go if you wanted to get better rates on deposits?
3) If someone wanted to approach you with a better rate, what would be the most effective way of getting your attention but without pissing you off?
Any help would be greatly appreciated.
1) If you have a surplus of cash in your business how much do you value the rate you receive on deposits?
2) Where would you go if you wanted to get better rates on deposits?
3) If someone wanted to approach you with a better rate, what would be the most effective way of getting your attention but without pissing you off?
Any help would be greatly appreciated.
m4tt said:
Right couple of questions for business people:
1) If you have a surplus of cash in your business how much do you value the rate you receive on deposits?
2) Where would you go if you wanted to get better rates on deposits?
3) If someone wanted to approach you with a better rate, what would be the most effective way of getting your attention but without pissing you off?
Any help would be greatly appreciated.
I simply looked around for the best bonds and deposited a load of money in different one for 6 months at a time.1) If you have a surplus of cash in your business how much do you value the rate you receive on deposits?
2) Where would you go if you wanted to get better rates on deposits?
3) If someone wanted to approach you with a better rate, what would be the most effective way of getting your attention but without pissing you off?
Any help would be greatly appreciated.
job done
Up to £50k I got 5.5% gross on a 6 month bond.
Almost certainly could have got more, but I kept my money with our business bankers (HSBC) and I decided on a number of 6 months bonds to allow instant access if necessary which you can't do with some longer bonds.
Looking at their website now, the best rate offered is 4.65% so I think I did quite well
Almost certainly could have got more, but I kept my money with our business bankers (HSBC) and I decided on a number of 6 months bonds to allow instant access if necessary which you can't do with some longer bonds.
Looking at their website now, the best rate offered is 4.65% so I think I did quite well
Just one point here. Remember that while the money is in your company bank account it's not your money, it's the company's. As such, if the company were to get into trouble it would be up for grabs by all and sundry. The two best assets a company can have are 'cash' and 'property'. I'm of the view that it's best to own these two assets personally in order to ringfence them. I realise it means payong Tax, but that's just a fact of life.
It's also worth bearing in mind that if the company has too much surplus cash sloshing about it's easy to become undisciplined in terms of good housekeeping (credit control, agressive sales & marketing, costs analysis, etc..)
It's also worth bearing in mind that if the company has too much surplus cash sloshing about it's easy to become undisciplined in terms of good housekeeping (credit control, agressive sales & marketing, costs analysis, etc..)
Edited by srebbe64 on Thursday 13th March 09:39
Steve H said:
Sorry to hijack thread, but waht type of interest rate would you normally get on a 6mth bond of say £75k? I have cash deposit in Bank Account (and ISA) and think I may be missing out
Steve
I use HBOS for Personal Deposits , their six month rate just now is 6.5%AER on balances on their web accounts.Steve
http://www.bankofscotlandhalifax.co.uk/savings/per...
Edited by AndyAudi on Thursday 13th March 11:47
I have my business account with LTSB and they pay me about 3% I think. What I need is some sort of High Interest reserve account to put the company money in, as I could be missing out on a few grand a month in interest. LTSB don't offer this, so I'm wondering if it's possible to open up another account with a different bank just to get a decent interest rate. Time to call my accountant I think.
My bankers (NWB) have what they call a Treasury Account. Min Balance £30k. Monthly contracts - they just ring each month and ask if you wish to keep it running and update the rates(although can get access within 48hrs but lose a portion of that months interest), interest paid gross & either added to capital or paid elsewhere.
Its a reasonable balance between access and rate IMHO.
I can't remember the rates - the paperworks filed away ....
Its a reasonable balance between access and rate IMHO.
I can't remember the rates - the paperworks filed away ....
Edited by Egbert Nobacon on Friday 14th March 07:47
Simple deposit:
Alliance & Leicester
Commercial Bank Business 30 Day Notice
Deposit Account Issue 4 (Balance over £250k) 5.59%
Alliance & Leicester
Commercial Bank Business 30 Day Notice
Deposit Account Issue 4 (Balance between £50k and £250k) 5.22%
Alliance & Leicester
Commercial Bank Business 30 Day Notice
Deposit Account Issue 4 (Balance between £10k and £50k) 4.50%
Alliance & Leicester
Commercial Bank Business 30 Day Notice
Deposit Account Issue 4 (Balance over £250k) 5.59%
Alliance & Leicester
Commercial Bank Business 30 Day Notice
Deposit Account Issue 4 (Balance between £50k and £250k) 5.22%
Alliance & Leicester
Commercial Bank Business 30 Day Notice
Deposit Account Issue 4 (Balance between £10k and £50k) 4.50%
A&L Tier their interst rates meaning that say you have £10k and A&L pay 1% £1k-2.5k, 2% £2.5k-5k, 3% £5k-7.5k, 4% £7.5k-10k and a bank that bands their interest pays the same figures the calculation is as follows:
A&L
£1k-2.5k = £25 interest
£2.5 - 5k = £50 interest
£5k - 7.5k = £75 interest
£7.5 - 10k = £100 interest
Other bank with banded interest:
£10k @4% = £400 interest
Therefore you are getting £250 with tiered interest and £400 with banded. In your example of A&L lets say you have £300k in their 30 day business notice account.
£1 - £10k = £20 interest
£10k-50k = £1800 interest
£50k - 250k = £10440 interest
£250k - 300k = £2795 interest
With banded interest at 0.25% over base rate (5.5%)
£1 - £300k = £16500
Meaning you are £1465 better off. And have instant access to your savings, not 30 day notice.
Basically what I am saying is that most banks work like taxes with their interest rates (tiered), where as only one that I know of applies the rate of the highest band you achieve to all of your savings (banded).
If anyone wants to learn more give me a shout.
A&L
£1k-2.5k = £25 interest
£2.5 - 5k = £50 interest
£5k - 7.5k = £75 interest
£7.5 - 10k = £100 interest
Other bank with banded interest:
£10k @4% = £400 interest
Therefore you are getting £250 with tiered interest and £400 with banded. In your example of A&L lets say you have £300k in their 30 day business notice account.
£1 - £10k = £20 interest
£10k-50k = £1800 interest
£50k - 250k = £10440 interest
£250k - 300k = £2795 interest
With banded interest at 0.25% over base rate (5.5%)
£1 - £300k = £16500
Meaning you are £1465 better off. And have instant access to your savings, not 30 day notice.
Basically what I am saying is that most banks work like taxes with their interest rates (tiered), where as only one that I know of applies the rate of the highest band you achieve to all of your savings (banded).
If anyone wants to learn more give me a shout.
Edited by m4tt on Saturday 15th March 11:34
srebbe64 said:
Just one point here. Remember that while the money is in your company bank account it's not your money, it's the company's. As such, if the company were to get into trouble it would be up for grabs by all and sundry. The two best assets a company can have are 'cash' and 'property'. I'm of the view that it's best to own these two assets personally in order to ringfence them. I realise it means payong Tax, but that's just a fact of life.
It's also worth bearing in mind that if the company has too much surplus cash sloshing about it's easy to become undisciplined in terms of good housekeeping (credit control, agressive sales & marketing, costs analysis, etc..)
I agree completely. Here in the channel islands there's now a ZERO % tax rate on company profits yet I would rather pay surplus cash out and pay the tax on it NOW and do something with it personally than leave it in the company as personal tax rates may change in the future or, if tax revenues fall sharply they may even need to introduce a VAT It's also worth bearing in mind that if the company has too much surplus cash sloshing about it's easy to become undisciplined in terms of good housekeeping (credit control, agressive sales & marketing, costs analysis, etc..)
Edited by srebbe64 on Thursday 13th March 09:39
srebbe64 said:
The two best assets a company can have are 'cash' and 'property'. I'm of the view that it's best to own these two assets personally in order to ringfence them. I realise it means payong Tax, but that's just a fact of life.
It's also worth bearing in mind that if the company has too much surplus cash sloshing about it's easy to become undisciplined in terms of good housekeeping (credit control, agressive sales & marketing, costs analysis, etc..)
Couple of interesting points there.It's also worth bearing in mind that if the company has too much surplus cash sloshing about it's easy to become undisciplined in terms of good housekeeping (credit control, agressive sales & marketing, costs analysis, etc..)
Edited by srebbe64 on Thursday 13th March 09:39
I have gone down the route of taking a £5.3k wage and share dividends for myself and my partner up to the 40% limit and then leaving the cash in the business for years when we won't make enough to pay a dividend to keep us at the 40% threshold or when we wind down to retirement. I know it feels safer having the cash in your account than the company's but I hate paying the 40%, then the NI, and then the 20+20% tax on the interest it gains whilist in my bank acount.
The latest CT increases have eroded the benefit but if the business is stable and doing OK and the reserves are not at risk from creditors would you still say it is best to get the money out or is it all about risk?
I agree on the later point and I try to minimise the cash we have easy access to, to guard against my own weakness to spend if we have it. Being close to having zero cash in the business does keep the attention on getting invoices paid and invoices for work out promptly.
Interesting point about the A&L account, we have one and I must look in to the tiered rates.
I'm about to open one of these as well which looks good.
http://www.totalbusinessaccount.co.uk/ We bank with BofS anyway.
I also looked in to business funds a few weeks ago. Plus points are that the cash is off your balance sheet for the duration of the investment (maybe same for bonds etc?) so you're not paying corporation tax on it, plus they take the rate off inflation off the tax paid. So approx 3% can be taken off tax on any profit.
Downside is that if I'd invested in it recently, I'd have lost about 5%+ on a minimum £30k investment. I have an ISA in the same medium-adventurous fund and that's 5% down. Not terrible considering the markets, but I find it hard to recommend over a traditional interest account. You'd have to be in it longer term which is not ideal for most businesses.
I'm about to open one of these as well which looks good.
http://www.totalbusinessaccount.co.uk/ We bank with BofS anyway.
I also looked in to business funds a few weeks ago. Plus points are that the cash is off your balance sheet for the duration of the investment (maybe same for bonds etc?) so you're not paying corporation tax on it, plus they take the rate off inflation off the tax paid. So approx 3% can be taken off tax on any profit.
Downside is that if I'd invested in it recently, I'd have lost about 5%+ on a minimum £30k investment. I have an ISA in the same medium-adventurous fund and that's 5% down. Not terrible considering the markets, but I find it hard to recommend over a traditional interest account. You'd have to be in it longer term which is not ideal for most businesses.
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