Small Businesses Lose Over £1bn Annually by Keeping Cash in Business Current Accounts
Four out of the five major banks now pay 0% interest to business account customers
Small businesses lost over £1bn last year by keeping their cash in a low-interest business current account, according to a report by Flagstone Investment Management.
The research found that interest rates are now lower than they were 12 months ago, with four out of the five major banks now paying 0% interest – and Santander offering just 0.25%.
According to recent figures from the British Bankers’ Association, small to medium sized enterprises held £95.3bn in business current accounts at the end of 2015, an increase of £8.1bn since the end of 2014.
96% of firms currently use the big five banks but could be offered interest rates of up to 1.8% if they were to switch to alternative accounts.
Andrew Thatcher, founder and managing partner of Flagstone Investment Management said:
“Small business owners are paying an exorbitant and rising price for neglecting to switch bank accounts.
“The fact is, switching to higher paying accounts can deliver tens and even hundreds of thousands of pounds more in interest each year which could pay for a new member of staff or a significant investment in business infrastructure like IT.”
Need help with your business’ finance? Read our guide on finance for non-financial managers here.