A segregated bank account keeps a company’s clients’ funds separate from the company’s own money. This allows the company to hold the clients’ funds in a separate account so that there is no chance of interference or mishandling of money that does not belong to the company.
There are multiple reasons that segregated bank accounts can benefit a company; preventing inbound and outbound transfer errors, adding a level of security, and improving transparency to regulatory agencies and clients. Ultimately, a segregated bank account ensures that funds are properly allocated and kept separate from operational use.