There have been significant challenges to businesses over the past few years – austerity, changes in regulation , minimum wage and more recently the EU referendum – all within a climate of global uncertainties as the major world economies are in recovery. Most of these factors have some impact on almost all businesses within whom we interact.
The Bank of England has now cut rates from 0.50% to 0.25% – a move that has previously been expected, and priced accordingly by the markets since the results of the Brexit were announced. Head of BoE, Mark Carney, has also ruled out negative interest rates, and has provided business savers with some certainty going forward.
Business Savings have been worst affected, with interest rates for U.K. Savings accounts from High Street banks being in the low and in some cases, nil percentages. Fortunately there are still many banks offering reasonable returns in the current climate and we encourage SMEs to review availability, particularly bearing in mind government protection up to £75,000 per banking institution. Currently, the highest Easy Access business rates are 1.10% to 1.35% for business interest rates.
Shop Around for the Best Rates Available
Last week, the Royal Bank of Scotland wrote to 1.3 business owners, saying that it may be forced to charge on credit balances, should the Bank of England take on negative base interest rates – mentioning they may charge businesses for holding deposits. This announcement was currently limited to only two High Street banks, concerned with their own margin pressures.
There is still ample opportunity for business to work the unutilised asset – cash. At the same time as the above announcement, there are a large range of banks offering relatively significant returns from overnight to 1 week 1 month and 1 year plus terms, so it is worth shopping around for the best returns.
“For now, it’s unlikely a cut in the base rate to 0.25 per cent will result in charges. But this is certainly something to be wary of further down the line if you are a small business owner with cash in the bank. It may be a good reason to shop around for a different bank, one that commits not to impose charges,“ writes Ben Chu, Economics Editor at the Independent.
We at Strongjones urge all businesses spend time reviewing market alternatives for their cash surplus. This would be as simple as a marketplace review – taking a few minutes, allowing you to continue your primary banking relationship without any change. This combined with straightforward cashflow management allows the business to extract additional income for minimal effort.
We provide SMEs solution to manage cash and maximize returns and are happy to discuss our solutions further and we aim to provide solutions that every business should be seeing from their banks in some form. Our startup is presently taking on Beta Group customers – contact us to learn more.