Growing your business requires hard work, so surely it’s only right that your money should be working as hard as you are? Well, it seems as though this isn’t always the case. In fact, UK small and medium sized businesses are collectively missing out on over £1 billion in savings interest each year, all because their lazy money isn’t working hard enough.
The UK’s small and medium sized businesses currently have around £100 billion in surplus cash*. However, a lot of this cash is sitting around in current accounts, earning paltry amounts of interest, when it could be working hard to fuel growth. In a business savings account, lazy money could quickly become easy money.
Here are 5 reasons to get lazy money working harder for your business.
1) Turn your tax payments into a money-making opportunity
As a business owner, you’ll need to make sure you have enough money to pay your business taxes. Your Corporation Tax deadline is 9 months after the end of your accounting period, so it’s wise to put some money aside to cover this expense – you don’t want to forget about it and be left without enough when the deadline arrives.
If you’re going to keep some of your profits set aside to pay future businesses taxes, why not make some money while you wait? Hold it in a business savings account rather than your current account, and certainly shop around. With 4 of the top 5 high street banks paying as little as 0.05% on an easy access savings account, you should look further afield where other providers are paying up to 22 times more interest^.
2) Boost your credit rating
If you want to access finance to help grow your business, it’s important to have a good credit rating. There are a number of different things you can to do improve your business’ credit rating, but one of the most effective is having a positive working capital and strong balance sheet. By putting your lazy money in a business savings account, it’ll work hard earning you interest, which will further boost your capital and balance sheet, helping improve your overall credit rating.
3) Make sure you’re prepared for anything
To be a successful business, you need to be prepared for just about anything. Everyday business obstacles, like overdue invoices, seasonal fluctuations and unexpected expenses can seriously impact your cash flow. This is why having a contingency fund is essential. In fact, in a recent survey of over 1,000 business owners**, we found that 36 per cent of small businesses use their surplus cash to protect themselves against unforeseen events.
4) Be ready for new growth opportunities
Growing your business costs money, whether you want to research and develop new products, expand your operations into new markets, or employ extra employees. Sometimes, a growth opportunity can appear out of nowhere and investment is required if you want to make the most of it. For example, you might receive a large order and need to invest money in additional staff to meet it in time. If your surplus cash is sitting around in a current account, this is a huge missed opportunity, especially when the average interest rate paid on a business current account is a miserly 0.07%+. Your lazy money could be working harder, earning you interest which can be used to fuel future growth.
5) Invest in your team
Finally, why not get your lazy money working harder so you can invest in your team? Whether you want to invest in them professionally, by providing training to help them boost their skills sets, or invest in rewarding their hard work.
Getting your lazy money working harder for your business couldn’t be easier. You can open one of our Business Savings Accounts online in under 15 minutes. You don’t need to make any changes to your current account or your day-to-day banking arrangements. This isn’t about shifting banks, just shifting cash.
Isn’t it time your lazy money was put to work?
*Source: BBA: Bank support for SMEs – 4th Quarter 2015
^Savings Champion.co.uk – interest rates effective as at 16th May 2016
**YouGov Plc. Total sample size was 1,008 Small Business Decision Makers. Fieldwork was undertaken between 4th - 12th April 2016
+ Savings Champion.co.uk – March 2016
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