TL;DR: Investments in a Business Account are less liquid than cash in a current account. ETFs trade every working day, so you can sell whenever you need to. There’s no notice period and no exit fee. From placing a sell order to the cash landing in your company bank account typically takes 4–5 business days. If the business needs same-day or next-day access to cash, that money is better off in a bank account.
Liquidity is one of the first things business owners ask about before they start investing. How quickly can they access their cash if they need it?
It’s an important question. Cash in a business bank account is as liquid as it gets and you can generally move it the same day. Investments aren’t that fast, but the gap is usually smaller than you might think.
Here’s a breakdown of exactly how liquid a Business Account really is, and how to think about it when planning your company’s cash.
What liquidity actually means
Liquidity is just how quickly you can turn something into spendable cash. A current account is perfectly liquid: the balance is cash, which is available instantly.
Investments are a step away from liquid, in the sense that they have to be sold first. Then the sale needs to settle, and then the cash needs to move to your bank.
That extra friction is the trade-off business investors make, for the chance of higher long-term returns. Money sitting in a business current account often earns little or nothing in real terms once inflation is factored in. However, money invested in markets has the potential to grow, but does take a few days to access.
How liquid is a Business Account in practice?
An InvestEngine Business Account is built using ETFs, which trade on the London Stock Exchange every working day. That means:
- No notice period. You can place a sell order whenever you like during market hours.
- No lock-up. Your money isn’t tied in for any fixed term when you invest in ETFs.
- No exit fee. Selling and withdrawing doesn’t cost you anything on the platform, no matter how often you do it.
- No minimum holding period. You can start a withdrawal the day after you invest if you need to.
What you can’t do is move the cash from the portfolio to your bank account instantly. The typical timeline from placing a sell order to receiving funds in the company bank account is 4–5 business days, broken down as:
- Trade execution. InvestEngine processes orders once a day during the trading window. Sell orders placed before 2:00pm UK time are usually included in that day’s trading cycle; anything after 2:00pm rolls into the next working day.
- Settlement. UK ETF trades settle on a T+2 basis, meaning the cash from the sale is usually officially available in your account two business days after the trade.
- Bank transfer. Once settled, you can request a withdrawal to your company’s UK bank account. This is a standard bank transfer and usually takes another 1–2 business days, depending on your bank.
So, in practice: place a sell order on Monday before 2:00pm, and the cash will typically be in your business bank account by the end of the week. This is typically faster than a fixed-term savings bond, but slower than a current account transfer.
How do businesses structure their invested cash?
A common approach is to think of business cash in tiers, and match each tier to investments with appropriate liquidity and volatility:
Tier 1 – Operating cash (days to weeks)
This means money for payroll, suppliers, rent, VAT, etc. This is usually best kept in the business current account or a business savings account. It’s not a great fit for investing because it’s needed quickly.
Tier 2 – Short-term reserves (months to ~1 year)
This is money you might need for a tax bill, a large purchase, or unexpected dips in revenue. Lower-risk investment options are common here. They sell on the same T+2 basis as any other ETF, but their day-to-day fluctuations in price are generally small.
Tier 3 – Long-term surplus (1–5+ years)
For the long-term, businesses often use retained profits that they’re not planning to spend any time soon. They can take on more equity exposure for the chance of higher long-term returns, accepting that the value will move around in the short term.
As with all investing, matching the time horizon of the cash to the volatility of the investment is usually a better strategy than trying to make any single portfolio do everything at once.
A quick worked example
Imagine the business invests £100,000 of surplus cash, split as:
- £20,000 in an Overnight Rate ETF (short-term reserve)
- £80,000 in a diversified mix of global equity and bond ETFs (long-term)
If an unexpected £15,000 bill lands on a Monday morning, the business can sell £15,000 of the Overnight Rate ETF before the 2:00pm cut-off. The trade goes through that day, settles by Wednesday, and the cash reaches the company bank account on Thursday or Friday, without touching the long-term portfolio at all.
The long-term holdings can carry on doing their job, and the short-term tier acts as a buffer that’s still working harder than money accruing no interest or returns.
Things to be aware of
A few practical points worth knowing:
- Orders placed after 2:00pm roll into the next working day’s trading cycle. Plan around that if you’re cutting things fine.
- Bank holidays and weekends don’t count as business days. A sell order placed late on the Friday before a bank holiday weekend won’t start moving until the next working day.
- Withdrawals can only go to the company’s UK bank account – the same verified account used to fund the Business Account. Funds can’t be sent to a director’s personal account or a third party.
- Selling crystallises gains or losses for the company, which form part of its Corporation Tax position. That’s a tax consideration, not a liquidity one, but it’s worth flagging.
FAQs
Can I withdraw the same day I sell?
No. Sell orders settle on a T+2 basis, and the bank transfer adds another 1–2 business days on top. Plan on 4–5 business days from sell order to cash in the company bank account.
Is there a minimum holding period?
No. You can sell the day after you invest if you need to; there’s no lock-up.
What happens if I place a sell order at the weekend or on a bank holiday?
It’ll be queued for the next working day’s trading cycle. The clock on T+2 settlement only starts ticking once the trade has actually executed.
Can I get the money sent straight to a director’s personal account in an emergency?
No. Withdrawals can only go to the verified UK business bank account in the company’s name. To get money to a director personally, it has to go through the company first (salary, dividend, director’s loan, etc.).
What if I need to withdraw during a market dip?
You can still sell because liquidity isn’t the issue. The issue is price: selling crystallises whatever the market is offering on the day. That’s why money you might genuinely need at short notice usually belongs in lower-volatility holdings (Overnight Rate or short-dated bond ETFs) rather than equities.
Are Overnight Rate ETFs as safe as cash?
No investment is identical to cash in a bank account. Money market ETFs aim to track short-term interest rates and typically have very low day-to-day price movement, but they’re still investments — capital is at risk, and they don’t have FSCS protection in the same way bank deposits do.
Can settlement ever take longer than T+2?
In some cases, yes. In periods of extreme market stress or operational issues, settlement can be delayed. It’s not common, but it’s a reason not to invest money you’ll definitely need on a specific day.
The takeaway
A Business Account isn’t as liquid as a bank account. For a lot of businesses, however, accessing your cash in a few business days is a reasonable trade-off for the opportunity to earn more on their cash.
With enough structure – like keeping operating cash in the bank and short-term reserves in low-volatility ETFs, for example – you can access some of the upside of investing without giving up the access your business needs to run.
Important information
Capital at risk. The value of your portfolio with InvestEngine can go down as well as up and you may get back less than you invest. ETF costs also apply. This communication is provided for general information only and should not be construed as advice. Tax treatment depends on individual circumstances and may be subject to change.