Joe Phelan, money.co.uk business bank account expert says:
“It may sound obvious, but for small, early-stage businesses, financial security is absolutely crucial – and getting the foundations right from the start can make all the difference.
Building emergency reserves, using credit wisely, and securing the right insurance are vital steps for maintaining financial stability, protecting cash flow, and strengthening resilience.
Today’s small businesses face a range of financial pressures. For example, National Insurance Contributions (NICs) are set to rise from 13.8% to 15% in April 2025, increasing payroll costs and squeezing profit margins.
On top of that, the ongoing cost of living crisis and the lingering effects of Brexit — such as higher import costs and trade barriers — have made financial stability more important than ever.
Building an emergency fund
Every business faces periods of uncertainty. A sudden drop in sales, seasonal fluctuations, or unexpected expenses can disrupt cash flow – and that’s why building an emergency reserve is essential.
Having a separate business bank account or a dedicated business savings account for your emergency fund will enable you to quickly access the money you need if a crisis occurs. A business savings account can also help grow your reserves over time, offering a safe place to store your emergency funds while earning interest.
Try to set aside at least three to six months’ worth of operating expenses as a cushion.
The key benefits of a business bank account are:
-
Separation of personal and business finances: Helps maintain clear financial records, making tax time easier and reducing the risk of mixing funds.
-
Easier access to funding: A business account can streamline loan applications and improve your chances of getting approved.
-
Professionalism and credibility: A business account enhances your company’s credibility with clients and suppliers by showing you are a legitimate and professional operation.
Using business credit cards
Emergency reserves are essential, but sometimes you need immediate access to funds that aren’t readily available in your bank account. This is where a business credit card can help.
Business credit cards provide quick access to credit when you need it, whether it’s for emergency repairs or covering payroll delays. Many cards also offer rewards and benefits such as cashback, travel perks, or business-related points.
The key benefits of using a business credit card are:
-
Improved cash flow: A credit card can help bridge gaps in cash flow, allowing you to cover expenses while waiting for income.
-
Rewards and perks: Many business credit cards offer cashback, travel points, or discounts on business-related purchases.
-
Building business credit history: Responsible use of a business credit card helps establish and improve your business’s credit score, which can be beneficial for future financing needs.
It’s crucial to use business credit wisely – keep an eye on interest rates, fees, and repayment terms, and try to pay off balances in full each month to avoid unnecessary charges.
The role of business insurance
No matter how well you plan, life can throw curveballs. That’s why business insurance is a crucial for financial security. The right insurance policies can protect your business from a variety of risks, including property damage, liability claims, or employee injuries
In the UK, small businesses should consider the following:
-
Public liability insurance: Covers claims from customers or the public for injury or property damage.
-
Employers’ liability insurance: A legal requirement if you have employees, covering workplace injuries or illnesses.
-
Professional indemnity insurance: Provides financial protection and support if a client files a claim for mistakes, advice, or work provided.
The right insurance ensures that even if disaster strikes, your business can recover without major financial damage.
Putting it all together
Emergency reserves, responsible use of business credit, and comprehensive business insurance are essential to creating a solid foundation of financial security for your business. With these in place, you’ll have the flexibility to face challenges head-on without putting your business at risk.
In the current financial climate, building resilience is key for small businesses in the UK. Whether you’re just starting or looking to strengthen your business’s financial security, these business essentials will help ensure you’re ready for whatever comes your way.”
