There are around 5.7 million businesses registered in the UK – and the vast majority of these are SMEs (small and medium-sized enterprises). We look at the latest statistics on how much businesses have in cash reserves – and whether they are saving any.
Research by Flagstone shows that the average mid-sized SME (small and medium-sized enterprise) holds around £620,000 in cash reserves. Meanwhile, the average small SME has around £225,000 in cash reserves.
This is a much higher figure than the average personal savings – which a Finder survey reveals is £19,214 – so there is potential for earning interest on this money.
According to Flagstone’s cash performance gap report, only 28% of SMEs are actively managing their cash reserves, which means that 72% are just leaving the cash sitting rather than making sure it’s earning the best savings rates.
In fact, 64% of businesses hold their surplus cash in a current account, which rarely offer decent (or any) returns. This is compared to the 39% of businesses that hold their cash in an instant access savings account, and the third (32%) of businesses that hold their cash in a fixed-term savings account.
| Account type | Percentage |
|---|---|
| Current account | 64% |
| Instant access savings account | 39% |
| Fixed-term savings accounts | 32% |
| Notice savings accounts | 24% |
| Cash management platforms | 23% |
| Money market funds | 14% |
| Other government bonds (e.g. Treasury bills and Gilts) | 13% |
Research shows that 77% of SMEs are looking for returns on their savings, but only a quarter (24%) have actually acted.
The top reason for this is that businesses want their cash to be liquid and easy to access, rather than locked away, with 2 in 5 (40%) giving this as a factor.
Other commons factors include the lack of time (27%) and a sense that it will be complex or difficult (25%).
| Reason for not finding better returns | Percentage |
|---|---|
| Want to keep cash liquid | 27% |
| Lack of time | 27% |
| Seems too complex | 25% |
| Sums are too small to bother | 25% |
| Concern about risks | 20% |
| Lack of awareness of options | 19% |
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