Firstly, there isn’t a set amount that businesses should have in their savings as every business is different; a business's savings will vary by size, industry, and risk profile. However, financial experts recommend that you keep at least 3-6 months’ worth of operating costs in reserve. Your business savings then act as a buffer, allowing you to ride out slow months or unexpected costs easier and with peace of mind.

Business savings give companies a safety net for when life happens, providing security and stability in the face of uncertainty and difficult periods. You can’t predict the challenges your business will face down the line. However, you can be prepared with savings set aside to support you through these. Business savings accounts also offer a safe space to earn interest on spare cash and save towards future expansion. Here are the benefits of business savings in more detail:

Funding growth

If you’re planning on growing in the future, a great way to fund expansion can be through a business savings account, allowing you to safely build up funds until you’re ready to expand. Usually, when looking to grow your business, you’ll most likely need funds upfront for things like new premises, better software and more personnel. Having business savings already set aside means you don’t have to rely on credit or external investments for your business growth. 

Unexpected expenses

Sometimes unexpected costs happen, such as emergency repairs, new machinery, or unexpected quiet periods. By having business savings readily available, you can handle these expenses without disrupting daily operations, using personal savings or needing to take out loans. Your savings act as an emergency fund, ready to save the day when the unpredictable strikes.

Economic downturns

The economy can also impact your business finances, which is why building financial resilience in the form of business savings is important. You can’t always predict when economic downturns may occur or fully understand how they will impact your business, however, you can prepare.  Your business demand can slow and supply costs can increase during times of economic uncertainty, but having savings stored away can help maintain cashflow, pay fixed costs and retain staff. They act as a buffer, increasing your resilience to external shocks and strengthening your business for the long term.

Weathering slower periods

Depending on your audience and industry, your business may be seasonal. This means demand is higher in certain months of the year, such as for an ice-cream vendor, who’d earn most of their revenue during the summer months. In the slower, off-season months, it is handy to have savings to fall back on when revenue is low. This helps avoid cash flow issues, overstretching your budget or relying on loans and overdrafts. 

Business savings accounts work similarly to personal savings accounts, however, help separate business savings from your personal savings. They are designed as safe, secure places to build on any spare cash you may have. There are different types of accounts to suit your business needs. If you’re using it as an emergency fund, you may prefer accounts that provide more access. However, if you’re looking to earn interest and grow your reserves, notice accounts may be more suitable, typically offering better rates. They’re a great tool to help manage funds more efficiently, build reserves for the future and provide peace of mind during difficult periods.

We’re here to help you make the most of your business savings with our range of accounts available to sole traders, partnerships (unincorporated entities), limited companies, and limited liability partnerships. As a local building society, we are proud to be empowering local businesses to reach their business savings goals. 

We offer different accounts to meet your needs, including notice and limited access business savers.
You can find out more on our business savings page here and find helpful support tips on our page here.