The best financial advice for newly funded SME clients

When an SME client receives funding - whether it’s seed or later stage finance - it’s always a time for celebration. 

But it’s also the time for you, their financial advisor, CFO or finance director, to step in. Because while CEOs - who’ve been battling for this money for months or even years - may be excited to put it to work, there’s the immediate concern of what happens to it in the short term.

When the company pitched to investors, it will have outlined its plans for growth and listed its priorities. Perhaps it plans to go on a hiring spree, to ramp up its marketing or improve its product?

But this won’t happen on day one of the money hitting their bank account. 

In the excitement of receiving the funds, CEOs may overlook some critically important factors needed to protect their newly acquired cash as well as assure their shareholders. 

And with a record number of small businesses receiving the finance they need, the SME space looks set to be a fertile space for financial advisors and wealth managers. 

So if you have SME clients that are newly funded, here are three pieces of must-have advice to offer:

1. Tell them how to protect their money 

CEOs will more than likely be familiar with the protection offered by the Financial Services Compensation Scheme (FSCS) when it comes to their personal wealth. But do they know the FSCS also protects company deposits too?

Until 2015, the gold-plated FSCS protection was only available to companies which employed fewer than 250 people, had a turnover of no more than £44m and a balance sheet of no more than £39m. However, these restrictions no longer apply.

Now, deposits from all companies, no matter their size, are safeguarded in the event their bank or building society should fail - but only up to £85,000 per bank or building society. 

This means they should have no more than £85,000 held in any one UK-regulated institution. The company should spread its money out across several institutions to ensure it’s fully protected. 

2. Remind them to move their money into high-interest accounts 

If your client has a hefty sum of cash to deposit, there’s no point leaving it in an account paying little or no interest. While the last decade of painfully low rates made it difficult to find a decent deal from a bank or building society, the picture has started to change. 

In today’s new high-inflationary environment, rates have started to climb and competition among providers is hotting up. And it’s not just among the smaller, challenger banks. Even the big high-street players have started to get in on the action and are now rewarding savers with relatively attractive rates.

If your client is keeping some of the funds as capital reserves to cover future costs, there are some pretty decent rates available on fixed-term accounts. Easy access deals have also massively improved and this trend in better interest rates will continue.

3. Help them move their money regularly to get the best deals

Cash management is an ongoing task. Your client shouldn’t just park their money and leave it there until they need it. 

New deals are coming to market all the time. And with experts noting that inflation could rise further throughout 2022, interest rates could also continue to increase, benefiting savers. 

For money deposited in fixed-term accounts, make sure to remind them well in advance of maturity dates so you can help them move their cash to a new, higher-paying deal.

If they have money in an easy-access account, it’s important to keep an eye on who’s paying the best rate and suggesting they switch to a new provider if a better deal becomes available.

Use a cash-management platform 

Managing and monitoring cash and savings rates can be labour-intensive and is unlikely to be high priority for the CEO of a newly funded company. 

That’s where a cash-management platform, such as Akoni, comes in. It offers easy and fast access to a range of high-paying accounts so your client doesn’t have to spend hours researching deals and can focus on getting on with running their business.

You can manage and monitor multiple accounts on Akoni’s intuitive dashboard and when new deals become available, you can help them switch seamlessly with no fuss or hassle. 

All of Akoni’s 20 banking partners offer full FSCS protection, so your client’s money can be 100% protected. 

If your client prefers you to manage their money themselves, you can help them create an Akoni account which will give them a 360-degree view of their cash deposits. 

Alternatively, you could consider having your own branded cash and savings platform for your business with Akoni’s white-label offering. Whatever the size of your firm, we can roll this out at no extra cost. 

Want to find out more about the award-winning Akoni platform? We’d love to chat.
Send us a message and we’ll arrange a call.