Productivity is a buzzword in business, usually referring to the UK’s poor record of output per worker per hour when compared to our European neighbours.
But money can also be unproductive if it is left idle. So, some big numbers caught my eye in this article about small and medium sized businesses (SMEs).
A YouGov survey found that more than £100bn of cash is sitting in the 5.5 million current accounts of UK SMEs. More than 80 per cent of these accounts are with big four banks and pay a big fat zero in interest.
Of course, businesses need current account cash at the ready. But £100bn suggests there is plenty that could be put to better use in short and long-term deposits that do pay interest. Even where firms are funnelling funds into accounts with interest, they are often settling for paltry returns at or below 0.10 per cent. Many are no doubt using the deposit accounts of their current account provider, which could explain the YouGov finding that only one in 12 SMEs is earning more than the Bank of England base rate.
Inertia is the enemy here. Senior managers told YouGov that the paperwork is off-putting. But it needn’t be so. We’ve just launched a 90-day business deposit account paying 1.25 per cent interest, to sit alongside our existing 30-day account (which pays 0.80 per cent).
Both our accounts are ahead of base rate, both are simple to open and to operate. They’re for SMEs in our heartlands. If your business is not based in Leicestershire, Warwickshire, Nottinghamshire or Derbyshire, you’ll need to look elsewhere. But other building societies and challenger banks are also offering good deals.