As an entrepreneur running a bank that focuses on helping other entrepreneurs achieve their growth ambitions, I’m dismayed by how many businesses are still saving with a bank that’s paying next to nothing in interest.
Of course, business owners’ time is incredibly important and the potential return needs to warrant the time spent on opening an account. And I get that moving money can often be a headache, if the business is forced to spend hours on the phone speaking to a bank manager or sitting in a branch. However, if it’s literally as simple as taking 20 minutes to fill out an online application form, isn’t it worth it?
We recently carried out some research to find out just how much SMEs are losing by leaving their savings with the big five banks rather than a challenger and were shocked that the collective figure came to over £537m. At present, SMEs in the UK save £66.6bn in deposit accounts, of which 74% (£49.3bn) is held with the big five banks (Barclays, Lloyds, HSBC, RBS and Santander). These banks provide an average rate of 0.36% compared with the average offered by the top 10 challenger banks of 1.45%. This results in a difference of 1.09% in interest or a collective loss of £537.2m to UK businesses every year.
With the ongoing Brexit uncertainty, a reduction in consumer spending and the pound worth less than it was before the referendum vote, this is money that could be used to safeguard businesses against unforeseen expenses. One such expense is cyber-attacks, which have affected one in six SMEs in the country and cost one in 10 more than £50,000.
The new year is the perfect opportunity for businesses to take a fresh approach to their savings and start shopping around for the best deals for their needs. At OakNorth, we offer competitive fixed bond business deposit accounts with an application process that can take as little as 20 minutes.
So, whether you’re a sole trader, a start-up or a more established SME, making the most of any spare cash you have should be a top priority and could make you several hundred pounds in additional interest each year.
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