UK Contractors: Many Smaller Sized Firms Don’t Have a Business Savings Account

New findings have revealed that just 31% of smaller sized businesses, such as limited company contractors, have a business savings account.

Latest research from Aldermore’s report ‘Saving SMEs’ has found that less than a third of smaller sized firms have a business savings account.

Of the 1,000 decision makers in business surveyed, only 16% of sole traders have a business savings account, while 38% of small and medium-sized companies in London are most likely to have an account, compared to the East Midlands and North East where this figure is just 21%.

Forty per cent of small businesses with a savings account said that the main reason for having one is due to unforeseen circumstances. More than a third (35%) use it for business taxes, while 34% said it is to help with cash flow fluctuations.

Of those surveyed, 28% said that they would be more inclined to save into an account if interest rates increased over the next 12 months.

The report also found that more than nine out of every 10 businesses that do have a savings account choose to hold their savings with the same bank as their business current account.

Simon Healy, Managing Director of Savings at Aldermore, commented on the findings, “It is concerning that only a minority of small and medium-sized businesses have a savings account, as surplus funds provide protection against unforeseen cash flow issues which can create real problems.

“This, coupled with the fact that nine out of 10 SMEs hold their savings with the same bank as their business current account, shows that businesses are simply not looking around. This is concerning and underlines the issues raised by the Competition and Markets Authority ongoing consultation on competition in the SME finance sector.”

How could registering for the Flat Rate VAT Scheme benefit you? Read our guide to the Flat Rate VAT Scheme.