Business & Technology
UK SMEs leave cash in current accounts, survey finds
KAREN JOY BACUDO
Finance Editor
Some 64% of UK SMEs keep some or all of their cash reserves in current accounts, according to a survey of 400 senior financial decision-makers.
The main reason is a desire to maintain liquidity, cited by 40% of respondents. Lack of time was next at 27%, followed by perceived difficulty at 25%.
The figures point to a gap between businesses that actively manage surplus cash and those that leave money in accounts that typically pay little or no interest. Many firms appear to prioritise access to funds even when the cash is not needed for day-to-day operations.
Almost half of SMEs (47%) do not have a documented strategy to monitor, allocate, and optimise cash holdings. Of the 53% that do, only half include measures to protect cash, while the same proportion do not manage it under formal allocation rules.
This suggests that many smaller businesses manage reserves without a clear framework for balancing liquidity, protection, and income. The study described this as a performance gap in cash management across the sector.
“Finance leaders are under increasing pressure to do more with less and find performance in areas that may have been previously overlooked. One such place is cash reserves. Our research exposes how, while many SMEs rightly engage in cash management plans, there are several common opportunities to optimise these plans for even more positive impact,” said Lakhbir Sandhu, Chief Financial Officer at Flagstone.
Cash planning
The study also examined how businesses divide reserves between different uses. Nine in 10 SMEs said they segment their cash in some form, but the emphasis is on immediate operational needs.
Among those that segment cash, 70% hold funds for day-to-day activities such as payroll and routine expenses. By contrast, 55% keep a buffer for unexpected costs and urgent liquidity needs, while 48% set aside money for acquisitions, planned investment or other growth opportunities.
These figures suggest operational continuity remains the main driver of reserve planning. Longer-term uses for cash appear to receive less attention, even among businesses that already separate money into distinct pots.
“Whether by design or by accident, the lack of a formal, structured cash management strategy is likely to reduce visibility and limit opportunities to optimise returns,” Sandhu said.
He also pointed out how businesses classify reserves across short-, medium-, and long-term needs. The survey identified this as an area where firms could change how they hold money without giving up access to funds needed at short notice.
“Segmenting cash reserves by short, medium and long-term requirements can help businesses earn returns on their longer-term savings while maintaining liquidity for cash they frequently need. Passive cash managers may segment their cash too unevenly for safety. Cash is mainly allocated to keeping the business running smoothly, but that limits flexibility to manage risk or pursue growth opportunities,” Sandhu said.
Return trade-off
The report found that 64% of SMEs use current accounts to hold cash not needed for day-to-day operations. While 39% keep some cash in instant-access savings accounts, only 32% use fixed-term savings accounts and 24% use notice accounts.
This suggests many businesses still favour immediate access over yield, despite some fixed accounts with terms of one to three months offering rates above 4%. Cash left idle in non-interest-bearing accounts also loses value in real terms as inflation erodes purchasing power.
For finance teams, the issue is not simply where money is deposited, but how reserve policies are set and reviewed. Businesses without formal rules for cash allocation may be more likely to leave balances untouched in current accounts, even when some of that money could be moved into higher-return products with limited access restrictions.
The survey was conducted with the Centre for Economics and Business Research and Yonder Data Solutions. Flagstone said it oversees almost GBP £20 billion in assets under administration and is the UK’s largest savings platform by number of banks and savings accounts on its panel.
“There’s a clear opportunity for SMEs to balance earnings and access more strategically. Staggering cash across accounts that lock up funds for longer but offer better interest rates, alongside easy-access savings accounts that typically outperform current account alternatives, is one approach worth exploring,” said Sandhu.
Oxford-based Peripear has secured an Innovate UK Women in Innovation Award and a £74,974 grant for its development of a wearable device designed to prevent perineal trauma during labour.
The funding will support continued product development ahead of the company’s planned first-in-human study.
Nina van Schaick, co-founder and COO of Peripear as well as a midwife who trained at Oxford Brookes, said: “I’m sure I wasn’t the only one to see this gap.
“I was incredibly lucky to meet my co-founder, Eviatar Natan, right as my frustration about the lack of translation of evidence into practice had peaked.
“There was a proven mechanism that could reduce injuries occurring in up to 90 per cent of vaginal births, and it was being left out of clinical pathways simply because no standardised tool existed to deliver it.”
Peripear is developing what it describes as the world’s first automated perineal thermotherapy wearable, designed to prevent perineal trauma during childbirth.
A perineal thermotherapy wearable is an emerging medical device.
It is a hands‑free warm compress device used on the perineum during the second stage of labour to reduce severe tearing and episiotomies while improving maternal comfort.
Ms van Schaick added: “I’m a farmer’s granddaughter, and when I started practising over 14 years ago, I asked: where is the tool I need to implement this evidence? I looked around and realised we were still asking clinicians to improvise.
“Peripear is what happens when the person who has lived the problem, both personally and professionally, meets the person who can help her build the solution.”
The company behind bikemaker Raleigh, which was founded 139 years ago and has supplied bikes to the UK’s cycling city of Oxford over the years, has filed to appoint administrators.
Accell UK and Ireland, part of Netherlands-based Accell Group, filed a notice of intention to appoint administrators as the wider group kickstarted insolvency proceedings.
This follows a difficult spell for Nottinghamshire-based Raleigh, which confirmed job cuts in 2024 before reporting a £30m loss in financial accounts published the following year.
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The boss of Accell said it was a “deeply sad and frustrating situation” and that it had “tirelessly explored” every option for the future of the cycling business.
The company bought Raleigh in 2012 for around 100 million US dollars (£74 million), adding to its roster of bike brands throughout Europe including Haibike, Winora and Ghost.
Raleigh was founded in Nottingham in 1887 and was well-known for its Chopper model, which featured extended handlebars and is now part of its “retro” range.
It no longer manufactures bikes from Nottingham, and its head office has moved to Eastwood, Nottinghamshire, while the company has shifted to selling electric bikes under Accell’s ownership.
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Accell went through a restructuring in February, securing additional funding from shareholders and lenders and reducing debts.
The group said it had since “explored every possible avenue” for its future, including discussions with potential buyers, but that it had not been possible to find a solution which means the business can continue operating.
It has therefore initiated insolvency proceedings in the Netherlands.
Accell’s chief executive Jonas Nilsson said: “This is a deeply sad and frustrating situation given all the hard work and everything we have achieved, with the support of shareholders and lenders, to restructure Accell’s operations and finances.
“It is an especially difficult moment for our employees, creditors, customers, suppliers, and partners.
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“Every realistic option for the future of the business has been tirelessly explored, and none have resulted in a solution to continue the Group in its current form.
“Our immediate focus is to support an orderly process, provide clarity wherever possible, and work with the relevant court-appointed administrators to preserve viable activities and employment where circumstances allow.”
At its 1970s height, Raleigh employed more than 13,000 people across the UK, with around 8,000 working at its various Triumph Road sites in Nottingham.
The former factory land later became the University of Nottingham’s Jubilee Campus.
Raleigh subsequently moved its headquarters to Church Street in Eastwood, before leaving that site and relocating to Durban House in 2024.
Celebrating both GCSE and A-Level Results Days, the chain will offer the popular dish to students who buy one of its bubble teas.
The free offer is available at all 42 Rosa’s Thai restaurants across England and Wales.
To avail of the free noodles, students need to register on Rosa’s Thai website for a unique code, which they should present at the restaurant together with a copy of their results.
Rosa’s Thai has a new range of bubble tea flavours, including Ube-Taro, Matcha-Coconut, Mango Sticky Rice, and Milo Chocolate Milk, as well as favourites like Home-brewed Thai Tea with Tapioca, and Lychee Mango with mango boba.
Students can sign up for their free Pad Thai at rosasthai.com/result-day-free-pad-thai and find their nearest restaurant at rosasthai.com/locations.
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