An investigation into the state of the British business banking market by CashFlows, the provider of innovative business-to-business financial services, has revealed that small businesses are collectively spending more than £2.3 billion per year on transaction charges and fees to run their business banking, while simultaneously not being offered the ability to earn interest on their business accounts. The study exemplifies why changes in the services available to small businesses are in need of urgent review to help British business in their efforts to rebuild the economy.

 

According to the study, which was conducted by YouGov for CashFlows, 24 per cent of small businesses surveyed (over 1 million in Great Britain), pay an average of £1,792 on business banking charges every year, such as transaction fees. Perhaps unsurprisingly, over half of businesses (52%) would move their business current account to another provider in order to receive lower cost business banking services.

 

Nick Ogden (Pictured), Chairman and CEO, CashFlows, said: "There is widespread demand for a change in the way that businesses are served by the existing financial services industry.  Our research clearly demonstrates that there is a considerable gap in the business banking services currently being delivered by British banks and the services that customers actually require. There is a real need, and an ability, to simplify and reduce fees and charges to give businesses transparency and competitive choices."

 

"One of the ways to reduce some of these fees and get to a position where interest could be paid is by consolidating a range of services into one current account. This is an area we have been exploring with our Cashflows Account and already businesses are able to reduce their expenditure on fees, adding interest to this account could directly impact bottom-line business cashflow and stimulate increased expenditure and investment."


 


Data table I: CashFlows' calculation of bank fee payments:

In an average month, how much does your business pay in total in financial services fees for its merchant and business account services, including all monthly and transaction charges?

 

Monthly and transaction charges in average month

Percentage of GB businesses

What this equates to in actual number of businesses, according to data from the Department of Business, Innovation and Skills (http://www.bis.gov.uk/analysis/statistics/business-population-estimates)

 

Amount paid on average each month by GB businesses (Taking the mid-point value from each band)

£0 - nothing

21.87%

959,000

£0

£1 to £25

23.66%

1,037,491

£18,156,093

£26 to £50

15.11%

662,574

£25,177,793

£51 to £100

10.54%

462,179

£34,894,515

£101 to £250

7.55%

331,068

£58,102,346

More than £250

5.77%

253,015

£63,253,625

Don't know

15.51%

680,114

---

*There are 4,385,000 GB businesses with 1-49 staff

Total paid in fees in an average 12 month period: £2,395,012,455

 

Data table II: CashFlows' calculation of bank fee payments:

In an average month, how much does your business pay in total in financial services fees for its merchant and business account services, including all monthly and transaction charges?

 

Monthly and transaction charges in average month

Percentage of GB businesses

What this equates to in actual number of businesses, according to data from the Department of Business, Innovation and Skills (http://www.bis.gov.uk/analysis/statistics/business-population-estimates)

 

Amount paid on average each month by GB businesses (Taking the mid-point value from each band)

£51 to £100

10.54%

462,179

£34,894,515

£101 to £250

7.55%

331,068

£58,102,346

More than £250

5.77%

253,015

£63,253,625

TOTAL

24%

1,046,262

£156,250,486

*There are 4,385,000 GB businesses with 1-49 staff

(1,046,262 businesses pay £156,250,486 per month)

 

Total paid in fees PER BUSINESS in an average 12 month period: £1,792

 

 

About CashFlows

CashFlows® delivers a range of business to business financial services that are provided from a single account, designed to help businesses manage and maximise their cash flow.