However, due to uncertainty concerning the UK economy, many businesses are reluctant to borrow at the moment, and are waiting for stronger signs of an economic recovery. Investec’s research1 reveals that 63% of businesses with an annual turnover of £1 million or more are not planning on borrowing any money from banks between the end of June and September this year, and a further 17% are unsure as to how much they want to borrow.
This research approximates that 5,000 organisations have been turned down for credit from banks over the past six months. Of these, some 6% are spending more time chasing debtors and 5% are taking longer to pay creditors1.
As a further sign of concern about the trading environment, Investec’s research also reveals that 9% of businesses with an annual turnover of £1 million or more have cancelled or postponed business development plans, which has collectively saved them over £600 million.
Jack Jones of Investec Bank said: “With a high degree of uncertainty over the economy, many businesses are reluctant to borrow money from their high street banks, and are either keeping their savings in deposit accounts, or using it to pay bills. Indeed, some deposit accounts are paying such derisory returns, that we expect to see more businesses using their cash reserves as capital to pay for projects and other costs within their organisations.
“Our research2 shows that 13% of accounts aimed at businesses are now paying less than 0.1% Gross AER3 on balances of £50,000 for example, which is negligible. Businesses need to ensure that they are receiving a competitive return on their cash reserves and if they are not, be prepared to switch to another account.”
The Investec Business High 5 Account, which requires businesses to make a minimum deposit of £50,000, pays a market leading rate every week4. This is because each week, the independent financial product research company Moneyfacts will take the five highest savings rates in the business savings market across the categories of no notice, 7, 30, 60, 90 and 90+ day notice accounts, find their mid-point and use this to set the rate for the Business High 5 Account. As well as being assured one of the best rates available, businesses also have the added benefit that the rate is set independently.
The Business High 5 Account, which has a three month notice period, does not rely on bonuses to inflate its rate. The current rate is 1.96%4 Gross AER3.
To find out more about the Investec Business High 5 Account or Investec Bank’s other unique savings products, please call 0845 366 6333 or visit www.businesshigh5.co.uk
1 201 businesses with a turnover of £1m or more were surveyed between 14th and 18th June 2010. The research was conducted by BDRC Continental.
2 Investec Bank analysis of Moneyfacts data (July 2010) on savings accounts aimed at UK businesses for balances of £50,000.
3 ‘AER’ stands for Annual Equivalent Rate and illustrates what the rate of interest would be if interest was paid and compounded once a year. ‘Gross’ stands for the rate of interest paid before the deduction of tax.
4 The Investec Business High 5 Account always pays the average of the five highest savings rates as supplied by the Moneyfacts Group plc, across the categories of no notice, 7, 30, 60, 90 and 90+ day notice accounts. No more than one product from any bank, building society or financial institution is taken into account when calculating the AER. Moneyfacts is an entirely independent and impartial source of information and their selection charts can be seen throughout the UK national press and media. The rate is correct as at 2 September 2010 and subject to variation.