The missing millions – Is your bank paying you enough interest?
Simon Healy, managing director of savings for Aldermore, looks at an easier way to help you maximise your cash
Promising to sort out your finances is one of the more popular New Year’s resolutions, not just for individuals but for businesses too. There are always good intentions but how many small business owners have the time to look for the better deals?
Looking after your financial affairs is something we all feel we could be better at and this is especially true of small business owners. In research Aldermore conducted recently, 24% of small and medium-sized businesses didn’t know what interest rate their business was receiving on their surplus funds and a further 23% admitted their business receives 0% interest.
Despite these low or non-existent rates of interest, research also showed business owners regularly review their surplus funds, six out of 10 (62%) do so at least once a year which indicates that businesses are thinking about how their cash could be working harder for them.
So why is the UK business community missing out on millions of pounds? Our research suggests that many business owners like you are simply not shopping around to find the best deals for your cash. Finding the right business savings account for you and your business is easier than you may think.
Earlier this year we launched our free online business rate checking service. It allows you to compare the interest rates on business accounts with over 90 different banks and savings providers. You can compare the rate you’re currently earning and compare this against the rates Aldermore could give you. It even shows you the difference your balance could earn should you place your money in a business savings account with us. There have been over 6,500 business owners who have used this service to date.
Cashflow is the lifeblood of any company and when your business is doing well and you have cash available, knowing and planning what to do with that cash is hugely important.
Being sensible with your business should mean that you hold a contingency fund. Businesses should have at least three to six months of operating costs saved to ensure any cost concerns that could hit your business can be covered. But where is that cash being held? Are you maximising the return that cash could give you? And what about cash you may have in excess of your contingency amount?
There is an understandable fear of not being able to get to your cash should your business suddenly need it, meaning that many small and mid-sized businesses hold their surplus monies in a current account.
41% of those interviewed in our research held the majority of their surplus cash in a current account – effectively losing money by simply worrying that they won’t be able to get to it quickly enough should they need to. But with the ability to manage your savings online, funds placed in an instant access business savings account would normally be back in your current account the same working day (or at the latest the next working day), meaning you can have your surplus funds earning you interest.
There are savings providers that offer accounts which allow you to choose the period you save over, returning the funds back to your current account on a set date that suits your business objectives, such as paying tax bills. The longer the term you can save normally means a higher rate of interest.
A sensible option is to review what cash you will need and when for your business. Having ‘pots’ for different plans will allow you the benefit to seek out and place your monies in accounts which will give you a decent interest rate and make your money work for you whilst you put your plans in place.
There are many in our research (a whopping nine out of 10) that have taken the plunge and opened a business savings account, but they hold it with the same provider as their current account. However, there are better deals for your cash out there. You simply have to take a little time to look and that’s where the Rate Checker service can help.
There are lots of different types of business savings accounts available to meet your savings needs. Being a ‘savvy saver’ may seem like hard work, but with a few clicks to check out your current rate and online account opening in less than 15 minutes, it couldn’t be easier with Aldermore.