One clear pattern that has emerged for me - over the years contracting and attempting to be a diligent business owner - is to syphon off sums of money when my invoices come in, into visibly different pockets of liquidity.
Typically this is to earmark and accumulate:
.1. My quarterly VAT funds
2. My annual Corporation Tax (CT) funds
3. Funds for other initiatives and investments
How I currently implement this:
I have a savings account, which I use for VAT and I have another company with its own savings account, which I cheekily use for first company’s CT.
I happen to use Xero and this procedure ends up being a huge headache when balancing the books (for both companies in turn - I am convinced my accountant hates me) especially when at the end of the corporate year, there appears to be a large sum of money that has left the company, that in reality is not a dividend or any other kind of expense. BUT, the funds are still earmarked, so I endure the pain.
It would be great if Revolut for Business could allow me to earmark or otherwise tag funds for specific purposes, possibly protecting those funds from certain debits e.g. an ATM withdrawal
Given the current feature set, I feel earmarking is within breathing distance:
Imagine a pseudo-currency account, where the currency was arbitrarily called VAT Fund, that had an exchange rate pegged at 1:1 against any real-currency, say GBP.
On the face of it they would be 2 separate accounts, but under the hood they would not or are at least would not be exposed to exchange rate fluctuations.
An important feature would be that third-party systems, like Xero, would see one single account.
So in theory, the workflow is already partially implemented: to earmark funds, just do an Exchange from a real-currency to a pseudo-currency.
An enhancement would be to make this automatic: auto-syphon off a fixed amount or percentage of a credit from a recognised creditor e.g.
- 16.67% off a payment from my agent to syphon off the 20% VAT paid inclusive
This would actually be a cool feature for non-business users too; those frugal folks who like to save for things rather than use buy-now-pay-later credit or those not so frugal folk who do not have access to credit (perhaps having torpedoed their credit rating) would love this:
- That exotic holiday next year
- The wedding
- The deposit for that first-time-buyer home
- That new TV or sofa
For the sake of this feature request, let me state I have no interest on savings accounts interest rates - that is not the point here.