Tiny tech firms top business savings table

Small companies in IT are top of the business savings table, with healthier balances than equally-sized enterprises in nine other major sectors.

The average current account reading for non-large companies specialising in communications and technology is £843,000, up 5% on 2016, found Hampshire Trust Bank.

Although only small, the uptick is significant because it makes IT the only sector of the 10 measured to have grown business savings balances since the run-up to the EU referendum.

But the bank’s probe found the underlying reason to potentially point to Brexit uncertainty -- 75% of the tech traders said they planned to swell their savings pot to build “a cash buffer.”

And if maximising the buffer is the goal, then investments or a higher-interest account might stand the IT firms in better stead than simply leaving their funds in a current account.

“Rather than stockpiling cash in current accounts, SMEs should consider the opportunities available to make the most out of their hard-earned cash,” said Hampshire Trust Bank’s savings director Stuart Hulme.

“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.”

According to the probe, retail sector SMEs are the most active savers, investing 74% of total funds in business savings, in contrast to legal sector SMEs, who held the lowest proportion.

Charities decreased their business savings balances the most (-69%), followed by accountancy firms (-39%), which were last year’s biggest savers, but are now out-saved by the techies.  

With a typical balance of £667,000 though, accountants still look flush with cash, particularly set against the UK average balance for SMEs of £446,000, down from £556,000 before the EU vote.