You do not have enough bank accounts

The need for dual banking

Will Metro Bank survive?

A couple of weeks ago, its future hung in the balance.

Every British bank has to meet minimum capital ratios, and recently Metro Bank seemed to be running dangerously low on funds.

Under pressure from the Bank of England and with their share price slumping, they began acquisition talks with other banks. Finally they announced that they raised £325 million in new funding and refinanced £600 million in debt – and will live to fight another day.

There is a lesson here for your business, whether or not you are a Metro Bank client.

We have several clients who bank with Metro, including one with a large cash deposit. For many businesses it’s an attractive proposition, because Metro offers better interest rates than the big clearing banks such as Barclays or NatWest. It is also easier to have a relationship with a manager.

But this comes with a price – or rather, a degree of risk. When you use a challenger bank like Metro, it’s more likely that things can go wrong.

When that happens, your instinct will be to move your money quickly. It makes sense – your business is covered to the tune of just £85,000 if your bank fails.

But the problem is that it can take a long time to open a new business account with a different bank, for regulatory reasons. By the time you’ve gathered the paperwork and made the appropriate arrangements, your money could be at significant risk.

There’s a quick fix. We recommend that no matter who you bank with, you always have a second business account in another institution.

This allows you not only to spread your risk, but to move money much faster in case of a bank threat or failure.

And let’s be clear, this doesn’t just happen in “small” banks, nor is it vanishingly rare; it’s only a matter of months since I wrote to you about the collapse of Silicon Valley Bank, which was the preferred bank of almost half of venture-backed American start-ups.

So this advice applies even if you’re with one of the “big” banks.

When you work with us on your financial management, where you bank – and whether you have enough accounts – is the kind of “out of the box” financial issue we consider. It will likely never come on the radar of “standard” accountants, but experience has shown us that it can be critical in an emergency, so it’s on our list of best-practice issues to discuss with you.

We’re here to actively manage your cash…

…not looking at your financial situation once every few weeks, but working with you every single day to improve your financial situation. This includes looking at every aspect of your finances, from your banking arrangements to your financial reporting, financial processes, cash flow, budgets, expenses, credit control and more.

It’s the kind of hands-on, detail-oriented financial management that corporates take for granted. If you’d like to find out how you, too, can get world-class financial management, get in touch with me today.

Simply hit ‘reply’ to this blog or call us on 01279 647 447 to find out more.



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