Research from Aldermore1 conducted among 500 SME senior decision makers has shown that despite the fact that 64% of SMEs with savings think they could get a better rate, three quarters of SMEs (75%) have not switched their business savings account provider in a long time and could be missing out on securing a better deal.
Rates are a priority to nearly half of SME savers (47%), along with the ability to withdraw funds at short notice (44%). They also want a reputable provider (42%) and clear terms and conditions (39%).
Many SMEs however feel like switching might not be worth the fuss involved in moving to a new provider (62%), meaning they are potentially missing out on substantial interest gains, given providers including Aldermore enable customers to apply for an account in a matter of minutes.
Yet those who do utilise business savings are often mitigating any risk to their personal finances. Without having business savings to fall back on, a quarter of SMEs (25%) would have to use their personal savings to make up the shortfall, while 14% would have sold their personal possessions such as a car or item of jewellery. One in ten (11%) would have sold a house or other personal property.
Alex Myers, Director of Savings at Aldermore, said: “In a competitive environment, businesses could benefit greatly from exploring the range of business savings accounts available to them to make sure they are getting the best deal. We know that far too frequently, businesses default to keeping their funds with their business current account provider, and 13% of SMEs admit to not having a business savings account2. This could mean they aren’t maximising the potential of their business’ money.
“In other cases, SME leaders choose to stash their business savings in their personal accounts. It’s important to use a dedicated business savings account, not only to take advantage of the business-specific benefits they provide, but also to create a clear distinction from personal finances.
Myth: I can only open my business savings account with my current bank
Fact: Many banks offer business savings accounts, and you have the freedom to choose the one that best suits your needs. It’s beneficial to shop around, compare rates, fees and features before opening an account
Myth: Business savings accounts are not necessary if I already have a personal savings account
Fact: Mixing personal and business finances can create complications and make tax management more challenging. Having a separate business savings account helps keep your finances organised, simplifies bookkeeping, and provides a clear view of your business’ health
Myth: Business savings accounts are only for ‘big’ businesses
Fact: Businesses of all shapes and sizes can benefit from a business savings account. They offer a safe place to store extra funds, earn interest and plan for future expenses
Myth: Business savings accounts have low interest compared to current accounts
Fact: Business savings accounts offer competitive rates and will still help your business funds to grow
Myth: Business savings accounts tie up my money and limit access to my funds
Fact: While business savings accounts are meant for long-term goals, you can access your funds when needed. However, some savings accounts may have withdrawal restrictions or minimum balances, so it’s crucial to understand the account terms and conditions
**Ends**
Notes to editors
1Research conducted, on behalf of Aldermore bank, by Opinium between 13th – 19th July 2023, among 500 SME senior decision makers.
2Research conducted by Opinium on behalf of Aldermore bank between 24 October – 8 November among 1,000 senior SME decision makers.
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