Back to School for Savings Champion
Savings Champion is probably best known for helping individuals with their savings and it surprises some when they learn that we also help businesses, charities, trusts and schools. We find helping the latter three particularly rewarding, so we thought you may find it interesting how we have recently helped a local academy school.
The increase in the number of academy schools has created greater independence, which can greatly benefit the running of the schools. However in some cases this has resulted in a void of support for the daily management of schools, including financial administration, which would have once been provided by local authorities.
The impact of this, as we will highlight, is a lack of resource and experience when managing elements of banking. In the example below, Savings Champion helped increase the interest the school was earning by nearly £36,000 per year, simply by helping it use more appropriate accounts.
- Cash on Deposit of £2.3m
- £500,000 was cycled monthly to pay salaries and other costs.
- £1.8m held for development purposes
- Gross annual interest before advice = £2,300 per annum
- Gross annual interest after advice = £38,300 per annum
The school held its regular amount of £500,000 in a current account, believing that as funds were only being held in the short term, there was little benefit considering other accounts.
There was an additional sum of £1.8million, which the school was holding following an asset sale for imminent development purposes. Again, these monies were held within the current account.
The £500,000 used for wages was placed into easy access accounts to generate a return while pending payment.
The remaining deposits of £1.8m was separated according to the property developments scheduled for the coming 18 months. £300,000 was placed in three month notice accounts, with a further amount of £500,000 on six months' notice and the remainder tied up for one year.
The providers we used for these deposits were all challenger banks, achieving 1.65% for three months, an average rate of 1.65% for six months and 1.90% for the one year deposits.
Benefit to the school
By providing advice and administrative assistance, we were able to assist the school to increase the interest earned on its funds from 0.10% to an average of 1.67%. This meant that the income it received from interest increased from £2,300 to £38,300 per annum.
We reduced the exposure over the Financial Services Compensation Scheme (FSCS). Previously the full amount was held in a single high-street bank where now it's split across eight banking licenses.
The additional returns from their deposits allowed the school to be able to finance a new minibus, allowing more pupils to participate in extracurricular events and sports.
If you know a School, Trust or Charity that holds cash on deposit (and most do), we will happily review their accounts FREE of charge. Simply call 0800 321 3581.