A review of your business's cash accounts could significantly increase the interest that you could earn.
According to the Lloyds Bank Working Capital Index, UK businesses have £535bn in working capital and you can bet that much of this is sitting in business bank accounts, earning a pittance.
Many businesses leave their cash funds languishing in their business bank accounts, unaware of what is available to them.
However, they could potentially boost their savings income significantly if they opt for the highest-paying business savings accounts, rather than leaving their money in accounts paying miserly returns, if any interest at all.
While some business savings accounts offer as little as 0.05% or even less, moving to the best accounts can mean an increase of thousands of pounds to profits or even go a good way towards paying for a member of staff’s salary.
For example, NatWest’s Business Reserve is paying just 0.05% on balances up to £999,999 and 0.15% on balances above £1m.
In contrast, some of the best business easy access accounts pay significantly more, which can make a huge difference.
Kent Reliance’s Business Savings account issue 1 pays 0.90% on balances from £1,000 to £1m and Aldermore’s Easy Access Business Savings Account Issue 7 pays 0.85% on balances between £1,000 and £1m.
On a balance of £100,000, that could mean interest of up to £900 rather than £50 a year.
Notice accounts and fixed rate bonds pay even better rates, as access to the funds is more restricted. But many businesses don’t need easy access to all their working capital – so why miss out on a better return?
Al Rayan Bank is paying 1.50% gross/AER on balances of £250 up to £10m on its 90 Day Notice Business Account.
While United Trust Bank is paying 1.55% on its Business 1 Year Bond, on balances between £500 and £1,000,000
That means earning up to £1,550 a year on £100,000 – a significant improvement, although it may mean using a lesser-known provider.
However, this should not necessarily be a concern if it is part of the UK Financial Services Compensation Scheme (FSCS).
As well as increasing the amount of interest earned, it is possible for businesses to ensure that their money is spread across as many providers as necessary to give them FSCS protection.
The FSCS protects savings up to £85,000, per business, per banking licence, in the event that the savings account provider runs into financial difficulties.
All corporates are now entitled to the same £85,000 protection per institution, as personal customers are entitled to, regardless of their size, whereas previously only small companies were included.
Our Cash Advice Service takes the hassle out of opening multiple savings accounts to maximise returns and keep within the FSCS limits, saving your business valuable time and resources, as well as money.
Bear in mind that if you operate as a sole trader, you don’t have to keep your business savings in a business account, so you can take your pick from the best personal savings account rates, which are usually higher than the rates offered by business savings accounts.
For help finding the best interest rates for your business, please visit our business best buy tables or call us on 0800 011 9705 to talk through the options.
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