Research conducted by specialist challenger bank Hampshire Trust Bank shows that Small and medium sized enterprises (SMEs) based the construction and building sectors have less than average in business savings.
The annual study has shown that construction and building SMEs hold an average of only £264,000 in business savings accounts, while the national average is around £446,000.
Saving an average of just 48% total funds, compared to the national average of 52%, puts companies in that sector at risk of market fluctuations.
However, when looking at business savings as a whole, there has been a 20% drop compared to last year, with some 50% of companies choosing to invest in business development rather than saving. This investment is higher than the national average, with most businesses investing 32% back into the buisness.
The report show that only SMEs in the IT and communications sector have increased their business savings balances since the run up to the EU Referendum in 2016. With investment showing at 5% in savings for IT and communications businesses, they have overtaken traditional savers, such as accountancy firms, as the biggest savers.
These companies (some 75%) point to building a cash buffer as the main reason for the increased savings.
Although IT and communications businesses have the largest savings pots, SMEs in the retail sector are the most active savers, investing 74% of total funds in business savings, while SMEs in the legal sector hold the lowest proportion of total funds in savings (38%).
Stuart Hulme, Director of Savings at Hampshire Trust Bank, said: “Our research reveals the sector differences when it comes to the amount being put into savings accounts. It is encouraging to see that retail, accountancy and architect SMEs are confidently planning for the future by placing the majority of their total funds into savings. Given the current uncertain economic environment it is perhaps not surprising that charities have decreased their savings pots as they may be spending more on charitable causes, however, it is positive to see that in terms of the proportion of total funds being saved they are in line with the national average.
“Rather than stockpiling cash in current accounts, SMEs should consider the opportunities available to make the most out of their hard earned cash. It is important for businesses to shop around for a savings account that provides a better rate of return and helps them build for the future.”
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