Small and medium sized enterprises (SMEs) in the construction and building sector hold an average £264,000 in business savings accounts, according to new research from specialist challenger bank Hampshire Trust Bank.
The annual study shows that construction and building SMEs put an average 48% of total funds in business savings accounts, less than the national average of 52%. When asked why they were decreasing the amount in business savings accounts, 50% said they were investing in the development of their business, higher than the national average of 32%.
According to the data, IT and communications is the only sector to have grown business savings balances since the run up to the EU Referendum in 2016 – increasing their savings pots by 5% and overtaking accountancy firms as the biggest savers. The national average for business savings is £446,000, a 20% drop compared to last year.
When asked why they plan to increase the amount held in business savings accounts, 75% of IT and communications SMES said they were building a cash buffer, higher than the national average of 49%.
While 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. SMEs in the legal sector hold the lowest proportion of total funds in savings (38%).
Charities have decreased their business savings balances the most (-69%), followed by accountancy firms (-39%) and retail SMEs (-31%).
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.”