Building up a cash buffer can be a vital part of business management, particularly in uncertain times. It's therefore little surprise to find that small and medium-sized enterprises (SMEs) built up significant cash reserves in the lead up to the referendum, and many will continue to do so in the months ahead.
The study, from Hampshire Trust Bank, shows that the average business savings account balance now stands at £556,000, an increase of a whopping 104% from this time last year, driven by business owners storing up their cash reserves ahead of the vote. Not only that, but nearly a third (30%) of respondents said they intended to increase the amount of cash held in business savings following the outcome, with 38% of those saying this was to build a bigger cash buffer for their business.
At the same time, SMEs were also found to be increasing the amount of cash held in their business current accounts, with the average balance now standing at £423,000, up 81% from last year. The figures mean that, for every £1 held in a business current account, there's now £1.31 in a business savings account, reflecting a keen desire to boost finances.
"In an uncertain political and economic environment, this snapshot of SME savings suggests businesses are remaining cautious and this is causing them to boost their cash reserves," commented Stuart Hulme, director of Savings at Hampshire Trust Bank. "Therefore, the opportunities to make more out of every £1 earned should remain a key priority."
As with personal savings, one of the best ways to do that is by comparing business accounts to find the right deal. After all, with 21% of respondents saying they'd use the returns from their savings to invest in the infrastructure of their business, it's vital to get the best returns possible. Others (17%) said they were accruing cash to fund a major purchase – suggesting that uncertainty hasn't stopped them identifying opportunities for growth – while 31% wanted to have a ready source of cash available for regular payments.
This highlights the need to have an account that meets your business needs, whether this is an easy access account for accessibility to a fixed rate business bond for those looking to make a major purchase at a later date. Stuart added that by shopping around SMEs can identify accounts that can provide them with a wide range of terms as well as competitive rates of interest, allowing them to tailor their account to their cashflow and business requirements. So, whatever your reasons for saving, check out our business section and start building your reserves.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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