6 reasons why you should open a business savings account
The ability to generate positive (and long-term) cash flow is any business’ priority. While transactional accounts and access to credit and loan facilities are important for operational expenses, smart business owners understand the value of putting away money for future conditions in a business savings account.
What is a business savings account?
A business savings account is used to store funds to have cash reserves that can be useful for the future stability of a business. It’s a great add-on to your business account holdings because it’s designed specifically for businesses and built around your short- and long-term needs and access requirements.
In business as in life, you never know what’s around the corner. Having savings provides a financial cushioning and can bolster your balance sheet to propel your business forward.
Here’s how a business savings account can benefit your business:
- It creates a buffer against the unexpected
Savings can help you deal with and respond effectively to everything from changing market conditions to emergencies. Most businesses will experience dry seasons, difficult economies and unforeseen events at some point but having liquid assets means certainty in being able to keep up with business expenses without taking on more debt. - It makes hard-earned money work harder
Putting your money in a business savings or investment account gives it the advantage of earning interest and generating income that can be used to improve your overall cashflow management or grow your business’ financial security. - It can accelerate your business growth
Having extra cash on hand can help you reach your business goals faster and improve your profitability sooner. Available funds can be used to invest back in the business or to position your company for strategic growth by equipping you to make bold moves when opportunities present themselves - It helps you pay for major purchases
Whether you have planned future expenses or investments, need to replace equipment, or make upgrades or have business taxes to cover, preparing for necessary expenditure by having money set aside can alleviate the financial impact and help move your business forward.
Top tip: The best way to get into the habit of savings is to automate your savings. Choose a monthly amount, set it, and forget it. Treating it like a business expense means you’re consistently adding to your savings without having to think about it.