Boost business savings with short-term notice deposits

Why do businesses use notice accounts?

Many businesses need flexible access to cash, but still want to earn interest. The goal is to achieve the best of both worlds: increasing surplus savings while making sure funds are available when needed.

More businesses are exploring options like the notice deposit account. That's where you earn competitive interest on your cash and you can notify the bank that you want the funds released.

How do notice accounts work?

It works like a term deposit, where you earn higher interest than an at-call account because funds are locked away. But unlike a term deposit, you can nominate a notice period upfront as short as 48 hours or 7 days (up to 370 days) and top up your balance anytime.

Once you’ve submitted a notice request online for some or all of your funds, you’ll have to wait for the duration of your notice period before your money is available. Whilst serving notice, the nominated funds are still earning interest but at a lower rate.

The CommBank Capital Growth Account is an example of a notice deposit account. You can set up one or multiple accounts online and choose your preferred notice period.

The benefits of notice accounts

Savvy businesses use notice deposit accounts to plan ahead and take advantage of the benefits, including:

• Competitive interest rates
• Flexibility to access funds, after waiting the notice period you choose when you apply
• Cashflow management and planning for unexpected costs
• No fixed maturity dates
• Ability to top up at any time

Here’s one example of how a business might use a notice deposit account:

Businesses can use extra cash in many ways. It can sit in an account that doesn’t earn interest or be moved into one that’s interest-bearing. But, not all accounts earn equal interest or provide short-term access.

Say a business is paid a lump sum upfront for a job but doesn’t need to use the funds straight away. They could decide on an amount they’re comfortable setting aside and move it across to a notice account to earn interest. Setting up an account is quick and easy, it only takes 15 minutes.

This business has a fortnightly pay run, so selects a notice period of 7 days to provide ample time to access funds if they need more to pay staff. That happens when a job is delayed, so the owner submits a notice through their online banking app 12 days before the next pay run.

They may only need a small amount to cover the wage costs, leaving most of the deposit balance in the notice account, earning a higher interest rate. After 7 days,   the money is ready to withdraw, and employees are paid on time.

That’s just one way notice deposit accounts can help smooth your day-to-day cash flow without foregoing added interest.