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The research titled ‘Saving SMEs’ also found that in addition to only a minority of SMEs having a savings account to hold surplus funds, more than nine out of every 10 businesses that do have a savings account, choose to hold their savings with the same bank as their business current account.
Simon Healy, Managing Director of Savings at bankers Aldermore said: “It is concerning that only a minority of small and medium-sized businesses have a savings account, as surplus funds provide protection against unforeseen cash flow issues which can create real problems.
“This, coupled with the fact that nine out of 10 SMEs hold their savings with the same bank as their business current account, shows that businesses are simply not looking around. This is concerning and underlines the issues raised by the Competition and Markets Authority ongoing consultation on competition in the SME finance sector.”
The research conducted with polling company YouGov on behalf of Aldermore, canvassed the views from over 1,000 small and medium-sized businesses across Britain, focusing on their savings habits and their views on the economy.
The main findings include:
- Less than a third (31 per cent) of SMEs surveyed have a business savings account;
- 40 per cent of small businesses with a savings account say they have it for unforeseen circumstances, more than a third (35 per cent) use it for business taxes while 34 per cent said it is to help with cash flow fluctuations;
- More than one in 10 (14 per cent) SMEs with a deposit account never review their business savings, while a quarter of businesses review their savings account more than once every six months (the level of surplus funds they hold, the interest rate they are receiving etc); and
- More than a quarter (28 per cent) of businesses surveyed say they’d be more inclined to save into a business savings account if interest rates increased over the next 12 months.
Trends
Additionally, the report also found regional trends as well as the differences between micro, small and medium-sized businesses.
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Businesses in the East of England (41 per cent) and Scotland (40 per cent) think an interest rate increase would be negative for their business, compared to the 37 per cent of businesses in the South East that think an increase would be a positive step.
Aldermore’s Simon Healy said: “While rates remain relatively low, it is easy to understand why many businesses are attracted to the convenience of keeping their savings with their current account provider. However, it is important to ensure that any surplus funds are working as hard as business owners do. There are significant differences in the interest rates available on deposit accounts and it is important that businesses do not lose out on maximising the return they get on their hard-earned surplus funds.”
Lee Tillcock, Editor of comparison publication Business Moneyfacts said: “Even in the current low interest rate environment, the interest rates available to SMEs differ considerably by provider, from 0 per cent to 3.5 per cent depending on the level of savings and whether the business is willing to tie up their funds for a set term."
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Susie Hughes © Shout99 2014
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