If you’re a small business with a savings account you could be missing out on hundreds of pounds in interest payments as research shows more than three million businesses, are not earning any interest on their business savings.
The research by Aldermore has revealed financial pressures are the main reason for this. Two fifths of those not earning interest do not save a sufficient monthly amount, while a third of SMEs are exhausting their savings before they can gain any interest.
The current low interest rate environment is an additional concern as almost two in ten (19%) believe their bank does not offer high enough rates for noticeable interest to be earned.
Ewan Edwards, head of savings at Aldermore says: “Being a business owner comes with a whole host of challenges, so it is vital that business owners make their surplus cash work harder to provide additional financial support and to strengthen financial resilience.
“In addition, the research reveals that almost two thirds (65%) of business owners adopt the habit of having a business and personal savings account with the same provider. While this may appear to be the easiest option, taking this approach means businesses are missing out on a number of good products on the market. We encourage all business owners to shop around to find the best account on offer, as this can make a positive difference in the long term.”
For those businesses who are earning interest on savings, the majority (53%) are earning less than £300 annually, with 26% earning less than £100.
When exploring business savings habits among the self-employed and SMEs, almost two thirds (65%) hold a business account with the same provider as their private savings, regardless of the rate offered. This mindset is more acute among firms with more employees (50+), those with higher levels of cash holdings (£100,000+) and companies trading as a limited company.