Build your savings: Does your business use this strategy?

Cash Flow & Management Growth

Running a business or nonprofit means always being on the lookout for smart ways to save money while keeping risks low. One often-overlooked option that can offer both safety and a solid return is a business term-share certificate (the credit union version of a bank CD).

Whether you’re managing surplus funds or planning for future growth, certificates can be a tool to help you reach your financial objectives.

Learn what to consider and how to leverage business certificates as you try to maximize your savings.

How business certificates work

Term-share certificates are fixed-term investments that require you to deposit a lump sum of money for a set period, typically six to 60 months.

In return, you receive a guaranteed dividend rate that’s usually higher than what you would earn with a regular savings account.

At the end of the term, you receive back your initial deposit plus the accumulated dividends.

See our business certificates >

Benefits of saving with certificates

Whether you’re running a business or nonprofit, generating a reliable income stream is essential to funding products, programs or services. And knowing exactly how much you’ll earn with some of your savings can help you allocate resources more effectively.

Here are some other benefits worth considering:

Higher dividend rates

One of the primary advantages is the offer of higher dividend rates compared to regular savings accounts. If you’re trying to grow your savings, these higher rates can help give you a higher return on investment.

See today’s certificate rates >

Manage lumpy cash flow

Depending on your business or nonprofit, your income (and expenses) can fluctuate at times. Maybe you:

Receive a large deposit or pre-payment in advance.
Get a bump in cash over seasonal or festive events.
Receive a large donation.

When boosts like this occur, it’s helpful to have an investment strategy to make the best use of the funds.

A six-month certificate could help you earn dividends on surplus funds without locking them away for too long—ensuring liquidity if you need to, for example, restock inventory. If you have a longer savings window, you could explore a longer-term certificate.

Predictable returns

Business certificates (or business CDs) offer predictable returns, which is crucial for financial planning.

Unlike stocks or mutual funds, where returns can fluctuate based on market conditions, the dividend rate on a certificate is fixed for the term. That means you know exactly how much money you’ll earn at the end of the term!

This can allow for more accurate budgeting and financial forecasting with those funds.

Lower risk

If your organization prioritizes capital preservation, business certificates can be an attractive option.

The National Credit Union Administration insures each certificate up to $250,000, providing a safety net for your investment.

It’s another perk of being a credit union member!

Ability to ladder your investments

Laddering involves investing in multiple certificates with staggered maturity dates. This balances the need for liquidity with the desire for higher returns, as it ensures regular access to funds while benefiting from long-term interest rates.

Here’s how it works:

Divide your total investment into smaller investments. For example, if you have $100,000, you might divide it into five $20,000 investments.
Invest each portion into a certificate with a different term. For example, invest $20,000 into a one-year certificate, $20,000 into a two-year certificate, etc.
As each certificate matures, you can reinvest the principal and dividends into a new long-term certificate or use the funds for your business.

Flexible terms

Certificates come in a variety of term lengths, ranging from a few months to several years. This flexibility allows businesses and nonprofits to align these investments with both financial goals and liquidity needs.

Explore business certificate terms >

Financial stability

During times of economic uncertainty, having a portion of your assets in low-risk investments can provide financial stability and peace of mind.

Business certificates offer protection from market volatility. This stability can be especially valuable for small- and medium-sized businesses.

Preservation of donor funds

Nonprofits have a responsibility to manage donor funds or grants prudently. Investing some of your funds in term-share certificates could help demonstrate a commitment to preserving and growing these funds while minimizing risk.

Next steps

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Determine your organization’s financial goals and how term-share certificates can support them.
Identify the amount of money you can set aside and the time frame for which you can commit these funds.
Compare certificate options available and choose the one that best fits your organization’s needs.
Consider a laddering strategy to ensure a steady flow of funds.
Review your investments regularly and adjust your strategy as needed. As your organization’s financial situation evolves, you may need to reinvest maturing certificates or adjust the term lengths to better align with your goals.