One in three companies with an annual turnover of £1m or more have collectively withdrawn £2.43bn from savings to help pay higher interest rates on their debts, a new report has discovered.
Research found that between March and August this year, 36% of firms have withdrawn from their deposit accounts, with the average withdrawal worth £35,270. However, 4% of businesses have withdrawn £100,000 or more to help pay the increased interest rates.
According to Investec Bank’s findings, a quarter of businesses turning over £1m or more have withdrawn under £10,000, while 6% have withdrawn between £10,000 and £50,000.
Jack Jones of Investec Bank said: “Many companies are receiving paltry returns on their savings, and some have clearly decided to use the money in their deposit accounts to pay the more expensive interest they owe on their debts. This is perhaps not surprising when in September 2010 around one in three deposit accounts targeted at businesses were offering 0.1% or less gross AER on balances of £50,000.
“However, if you shop around, you can still find an attractive return on your business savings, which can help offset higher interest payments on your borrowings”.
Following the government’s Spending Review, business price comparison site Make it Cheaper, conducted a survey to identify the real impact on UK small businesses. the study discovered that small firms are set to save £1.68bn in the next 12 months by doing nothing more than replicating the consumer ‘money saving’ strategy of switching suppliers to obtain the best deal.
© Crimson Business Ltd. 2010