New research by the Hampshire Trust Bank shows that UK-based SMEs have around 20% less in their savings accounts than they did during the run-up to the Brexit vote in 2016. Although the fall may suggest greater spending and confidence to some analysts, the survey shows that they are no less concerned about the economy – and are just as keen to save.
Saving for uncertainty
According to the study, SMEs had built up reserves in the period prior to the EU referendum as a buffer against the unknown changes to come after the result. Statistics from 2016 show that for every £1 held in a current account, SMEs had £1.31 in their savings.
However, despite the UK still having no clear deal with the European Union over its exit from the legal and trading bloc, SMEs' savings have fallen to £1.09 for every £1 in a current account. That means the average SME now has reserves of £446,000.
More worry, fewer savings
While the amount in savings accounts has dwindled, SMEs are even more worried about the state of the economy in the long term. 56% say they plan to keep their savings stable, while 30% plan to put more into their pot.
Of those looking to boost their savings, 27% are doing so because they’re unsure about Brexit, compared to just 8% in 2016. A further 25% are concerned for the long-term economic outlook – an issue that preoccupied just 4% in 2016.
While it’s positive to see SMEs thinking about and planning for the long term, their rising concern and falling savings show just how difficult it is to manage savings and cashflow as a small- or medium-sized business. However, doing so will make it much easier to build secure foundations for the future.
Economic issues such as the falling value of the pound will continue to have an impact on business and, in particular, will increase costs for importers. Nonetheless, companies can avoid eating into savings by addressing ongoing concerns like late payments and unpaid debts. 30% of SMEs have had to write off debt in the last 12 months, and eliminating this needless cost could make a big difference.
For more information on how Dukes Bailiffs can help recoup debts and protect your cashflow, contact us today.