Less than a third (31%) of small and medium-sized enterprises (SMEs) in Britain have a business savings account, according to research released by UK challenger bank Aldermore.
The research conducted with polling company YouGov on behalf of Aldermore, canvassed the views of over 1,000 SMEs across Britain, focusing on their savings habits and their views on the economy.
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The research found only a minority of SMEs had a savings account to hold surplus funds, and more than nine tenths of businesses that did have a savings account chose to hold their savings with the same bank as their business current account.
Simon Healy, managing director of Savings at 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 tenths of 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."
Aldermore said other findings included:
– 40% of small businesses with a savings account say they have it for unforeseen circumstances, more than a third (35%) use it for business taxes while 34% said it is to help with cash flow fluctuations;
– More than one in 10 (14%) SMEs with a deposit account never review their business savings, while 25% 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%) 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.
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By GlobalDataThe report also discovered regional variations in trends as well as the differences between micro, small and medium-sized businesses.
Only 16% of sole-traders have a business savings account, while SMEs in London (38%) are most likely to have a savings account, compared to the East Midlands and North East, where only 21% of SMEs have one.
Businesses in the East of England (41%) and Scotland (40%) think an interest rate increase would be negative for their business, compared to the 37% of businesses in the South East that think an increase would be a positive step.
Aldermore’s 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."
