Boost your business savings interest

01st June 2017

I’ve been speaking at some business seminars over the last couple of weeks, spreading the word about just how much savings interest businesses are missing out on, because so many leave excess cash languishing in poor-paying accounts with their bank.
We all know that savings rates have been falling over the last few years, especially since the introduction of the Funding for Lending Scheme (FLS) in 2012. But what many business owners may not realise is that due to the influx of Challenger Banks, the new players challenging the high street providers, the gap between the rates paid on personal and business savings accounts has narrowed, since these providers tend not to differentiate between personal and business cash. In fact some providers actually specialise in business savings accounts; the likes of Cambridge & Counties Bank and the upcoming Redwood Bank (for more detail, see our article about the new providers to watch below). And because of this, there are occasions when business accounts pay even more than personal savings accounts.
As a result, we’ve helped our Business Concierge clients increase the interest on their cash deposits by, on average, 12.5 times. But it’s often far far more!
So why is that? Many businesses simply leave their excess cash languishing in their bank current account or if they do move it's generally into a savings account with their existing bank. The problem is, those big banks pay appalling rates on their savings accounts.

NatWest for example is paying just 0.01% on its Business Reserve account, regardless of the balance held – which means just £10 a year in gross interest for every £100,000 deposited. And they are not alone.

Incredibly Barclays pays 0% on balances of up to £999,999 (yes – no interest at all!!) – increasing to just 0.05% on £1m plus, on its Business Premium Account. And HSBC and Lloyds are not any better.

The HSBC Instant Access Business Money Manager account pays 0.03% on balances of up to £999,999, increasing to just 0.04% on balances of £1m plus. Whilst Lloyds pays 0.05% on balances of £1 plus to smaller businesses with a turnover of up to £1m on its Business Instant Access account, reducing to 0.01% for businesses with a turnover of more than £1m.

Compare that to the best business easy access account which is currently paying 0.90% - so rather than earning £10 per year on an account paying you 0.01%, your business could earn £900 a year. It’s effectively free money that could be used to pay bonuses or simply add valuable extra profit. And if you don’t need easy access to all of that money, you could earn even more.
But business owners often have better things to do than worry about the interest they can earn on the cash they hold. That’s where we can help. For those who would like to make their cash work harder but simply don’t have the time or the expertise, our Business Concierge Cash Service helps businesses maximise the amount of interest they earn. The service is ideally suited to businesses which hold a minimum of £200,000 in cash savings.
The average amount held by businesses in the Concierge Cash Service is £903,000. A business with a balance this size risks losing out on an average of £752 a month in interest, if they fail to move their money to the best paying accounts. That means over the next five years, they could miss out on a massive £45,150 in interest, assuming rates remained the same.
With our expert guidance and monitoring, it is possible for businesses to not only increase their savings income, but also to ensure that their money is protected.
The Financial Services Compensation Scheme (FSCS) protects savings up to £85,000 per business, per banking licence, in the event that the savings account provider runs into financial difficulties, just the same as on personal savings accounts. And this is now available to all businesses, not just small ones, a change that came into force in July 2015.  
This means that if you have more than this amount in savings with one institution, we can advise you on how to spread your business savings across several different accounts, to ensure your funds are fully protected.
Anna Bowes, Co-Founder and Director of Savings Champion 

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