Small and medium-sized enterprises (SMEs) have blamed time constraints for preventing them from opening dedicated business savings accounts. But are they missing out because of it?
Recent research from Hampshire Trust Bank (HTB), a commercial mortgages and asset finance specialist, looked at the issue of how SMEs spend their time. When asked what tasks they were most likely to put off carrying out, nearly a third of SMEs pointed to completing tax forms and legal paperwork. Meanwhile, around a fifth of companies told HTB that time was a barrier to them opening a business savings account.
The latter could prove to be a costly oversight. According to HTB’s latest ‘Savings Tracker’ research, UK SMEs have on average £409,000 sitting in their current accounts. However, business savings accounts typically offer superior interest rates (usually of the order of 1%) compared with more generic current accounts. Given this average amount on deposit, an extra annual income of around £4,000 could be generated for an SME just by selecting the appropriate bank account.
According to HTB, business savings are being overlooked by some smaller firms (defined here as enterprises of between 2 and 50 employees), with 41% indicating that they did not run a savings account geared towards their business. When it came to sole traders the figure rose markedly, with 80% not using business savings accounts.
When asked why they tend to delay tasks, SMEs responded that they had better things to do with their time (36%), that they run out of time (31%) and that it never seems to be a priority (29%).
The research, which took place in December 2017, was carried out in partnership with Opinium Research which conducted interviews with 500 UK SMEs.