UK small- and medium-sized businesses are set to miss out on a whopping £3.2 billion in interest in the next 12 months because their cash reserves are languishing in low-interest accounts.
A major report from the Centre for Economic & Business Research (CEBR), commissioned by cash-deposit platform Flagstone, reveals that SMEs are missing out on billions of pounds every year by not shopping around for a better rate for their excess cash – the reserves not required for the day-to-day running of the business.1
Although many businesses suffered through the pandemic, many others managed to maintain or boost their cash reserves, therefore increasing the importance of finding a better rate of interest. According to the report, almost a third (31%) of the 440 businesses surveyed by the CEBR stated that the value of their savings stayed the same last year, while 26% reported a rise in their cash deposits in the same period. Almost one in 10 saw those deposits increase by more than 50%.
The extra interest that businesses could earn if they moved their money to a better deposit account could be used to pay down debts from emergency loans taken out through the pandemic from government support programmes such as the Bounce Back Loan Scheme.
The importance of shopping around for a better interest rate is accentuated by two factors. Firstly, the Bank of England has hiked rates at the past three meetings of its Monetary Policy Committee (MPC), meaning there are better savings rates available than there have been for many years. Secondly, inflation is at its highest level in decades, making it even more important for cash reserves to work harder to offset the impact.
The interest rate currently stands at 0.75%, having risen from historical lows of 0.1% set during the pandemic. Some experts expect the rate to rise again to 1% when the MPC next meets in May. Meanwhile, inflation hit a 30-year high of 7% in March, with the Bank of England warning it could hit double-digits by the end of 2022.
Data compiled by the British Business Bank using the Bank of England’s Financial Stability report shows significant growth in cash reserves over recent years, with total cash balances increasing by 29% to £152 billion since the end of 2019. The data shows that the share of small businesses with cash balances of more than £10,000 increased from an average of 23% in 2019 to 31% in the second half of 2021.2
Andrew Thatcher, Co-Founder and Co-Managing Partner of Flagstone, says: “Apathy towards cash deposits does not just affect individual savers, but also the nation’s businesses too. Each year, UK SMEs are missing out on billions of pounds of interest income because they are not proactive in moving their money, often citing the process of researching and opening new accounts as prohibitively complex and time-consuming.
“Firms that forego this extra cash could be missing out on the chance to increase profit, grow their business by hiring extra staff, or invest in productivity improvements. This may also be damaging to the UK economy given that SMEs account for 99.9% of all UK private-sector businesses and 60% of all private-sector employment.”
Andrew concludes: “Platform solutions not only consistently keep business owners and financial directors in the path of the best rates, but also remove the barriers to switching, providing a simple way to increase income and reduce risk.”
It’s worth noting that deposit accounts are not the only way to make your company’s extra cash work for you. With corporate investing, a business owner uses the cash reserves or profits from the business to invest in equities, bonds or other asset classes over a longer time period. As with all investments, value can be lost as well as gained and it's always important to seek financial advice before making a decision. If the investment does work out, it could result in higher returns than if the cash is simply deposited in a bank account.
How we can help
Looking for the best place for your cash? Speak to us to find out more about the SJP Cash Deposit Service powered by Flagstone, or for advice on corporate investments.
UK small- and medium-sized businesses are set to miss out on a whopping £3.2 billion in interest in the next 12 months because their cash reserves are languishing in low-interest accounts.
A major report from the Centre for Economic & Business Research (CEBR), commissioned by cash-deposit platform Flagstone, reveals that SMEs are missing out on billions of pounds every year by not shopping around for a better rate for their excess cash – the reserves not required for the day-to-day running of the business.1
Although many businesses suffered through the pandemic, many others managed to maintain or boost their cash reserves, therefore increasing the importance of finding a better rate of interest. According to the report, almost a third (31%) of the 440 businesses surveyed by the CEBR stated that the value of their savings stayed the same last year, while 26% reported a rise in their cash deposits in the same period. Almost one in 10 saw those deposits increase by more than 50%.
The extra interest that businesses could earn if they moved their money to a better deposit account could be used to pay down debts from emergency loans taken out through the pandemic from government support programmes such as the Bounce Back Loan Scheme.
The importance of shopping around for a better interest rate is accentuated by two factors. Firstly, the Bank of England has hiked rates at the past three meetings of its Monetary Policy Committee (MPC), meaning there are better savings rates available than there have been for many years. Secondly, inflation is at its highest level in decades, making it even more important for cash reserves to work harder to offset the impact.
The interest rate currently stands at 0.75%, having risen from historical lows of 0.1% set during the pandemic. Some experts expect the rate to rise again to 1% when the MPC next meets in May. Meanwhile, inflation hit a 30-year high of 7% in March, with the Bank of England warning it could hit double-digits by the end of 2022.
Data compiled by the British Business Bank using the Bank of England’s Financial Stability report shows significant growth in cash reserves over recent years, with total cash balances increasing by 29% to £152 billion since the end of 2019. The data shows that the share of small businesses with cash balances of more than £10,000 increased from an average of 23% in 2019 to 31% in the second half of 2021.2
Andrew Thatcher, Co-Founder and Co-Managing Partner of Flagstone, says: “Apathy towards cash deposits does not just affect individual savers, but also the nation’s businesses too. Each year, UK SMEs are missing out on billions of pounds of interest income because they are not proactive in moving their money, often citing the process of researching and opening new accounts as prohibitively complex and time-consuming.
“Firms that forego this extra cash could be missing out on the chance to increase profit, grow their business by hiring extra staff, or invest in productivity improvements. This may also be damaging to the UK economy given that SMEs account for 99.9% of all UK private-sector businesses and 60% of all private-sector employment.”
Andrew concludes: “Platform solutions not only consistently keep business owners and financial directors in the path of the best rates, but also remove the barriers to switching, providing a simple way to increase income and reduce risk.”
It’s worth noting that deposit accounts are not the only way to make your company’s extra cash work for you. With corporate investing, a business owner uses the cash reserves or profits from the business to invest in equities, bonds or other asset classes over a longer time period. As with all investments, value can be lost as well as gained and it's always important to seek financial advice before making a decision. If the investment does work out, it could result in higher returns than if the cash is simply deposited in a bank account.
How we can help
Looking for the best place for your cash? Speak to us to find out more about the SJP Cash Deposit Service powered by Flagstone, or for advice on corporate investments.
UK small- and medium-sized businesses are set to miss out on a whopping £3.2 billion in interest in the next 12 months because their cash reserves are languishing in low-interest accounts.
A major report from the Centre for Economic & Business Research (CEBR), commissioned by cash-deposit platform Flagstone, reveals that SMEs are missing out on billions of pounds every year by not shopping around for a better rate for their excess cash – the reserves not required for the day-to-day running of the business.1
Although many businesses suffered through the pandemic, many others managed to maintain or boost their cash reserves, therefore increasing the importance of finding a better rate of interest. According to the report, almost a third (31%) of the 440 businesses surveyed by the CEBR stated that the value of their savings stayed the same last year, while 26% reported a rise in their cash deposits in the same period. Almost one in 10 saw those deposits increase by more than 50%.
The extra interest that businesses could earn if they moved their money to a better deposit account could be used to pay down debts from emergency loans taken out through the pandemic from government support programmes such as the Bounce Back Loan Scheme.
The importance of shopping around for a better interest rate is accentuated by two factors. Firstly, the Bank of England has hiked rates at the past three meetings of its Monetary Policy Committee (MPC), meaning there are better savings rates available than there have been for many years. Secondly, inflation is at its highest level in decades, making it even more important for cash reserves to work harder to offset the impact.
The interest rate currently stands at 0.75%, having risen from historical lows of 0.1% set during the pandemic. Some experts expect the rate to rise again to 1% when the MPC next meets in May. Meanwhile, inflation hit a 30-year high of 7% in March, with the Bank of England warning it could hit double-digits by the end of 2022.
Data compiled by the British Business Bank using the Bank of England’s Financial Stability report shows significant growth in cash reserves over recent years, with total cash balances increasing by 29% to £152 billion since the end of 2019. The data shows that the share of small businesses with cash balances of more than £10,000 increased from an average of 23% in 2019 to 31% in the second half of 2021.2
Andrew Thatcher, Co-Founder and Co-Managing Partner of Flagstone, says: “Apathy towards cash deposits does not just affect individual savers, but also the nation’s businesses too. Each year, UK SMEs are missing out on billions of pounds of interest income because they are not proactive in moving their money, often citing the process of researching and opening new accounts as prohibitively complex and time-consuming.
“Firms that forego this extra cash could be missing out on the chance to increase profit, grow their business by hiring extra staff, or invest in productivity improvements. This may also be damaging to the UK economy given that SMEs account for 99.9% of all UK private-sector businesses and 60% of all private-sector employment.”
Andrew concludes: “Platform solutions not only consistently keep business owners and financial directors in the path of the best rates, but also remove the barriers to switching, providing a simple way to increase income and reduce risk.”
It’s worth noting that deposit accounts are not the only way to make your company’s extra cash work for you. With corporate investing, a business owner uses the cash reserves or profits from the business to invest in equities, bonds or other asset classes over a longer time period. As with all investments, value can be lost as well as gained and it's always important to seek financial advice before making a decision. If the investment does work out, it could result in higher returns than if the cash is simply deposited in a bank account.
How we can help
Looking for the best place for your cash? Speak to us to find out more about the SJP Cash Deposit Service powered by Flagstone, or for advice on corporate investments.