Legal SMEs can save more amid market uncertainty
Firms encouraged to compare products to boost profits and match other sectors
Nearly half of SME law firms are saving extra money as they prepare for any possible fallout from Brexit, a higher proportion than other UK businesses, new research has revealed.
Some 45 per cent of legal SMEs '“ those firms with less than250 employees '“ said they were increasing their cash reserves due to concerns about the UK economic outlook, according to specialist challenger bank Hampshire Trust Bank (HTB). The national average was just 12 per cent.
Recent research has suggested regional firms are continuing to grow despite pre-Brexit uncertainty but the picture could soon change with the two year process for exiting the EU set to commence before March 2017.
Legal SMEs currently hold an average of £354,000 in business savings accounts '“ 60 per cent of their total funds compared to the national average of 57 per cent. Charities are the most active savers with 77 per cent of their total funds invested in business savings.
By comparison, businesses based within the accountancy and IT and communications sectors have the largest savings pots, with average balances of £1.08m and £804,000 respectively, compared with the national average of £556,000.
HTB also revealed that following the EU Referendum, over a quarter (27 per cent) of legal businesses said they were increasing the amount of cash in their firms to build a cash buffer, lower than the national average of 38 per cent, and distinctly inferior to the 50 per cent buffer that charities and those in the construction and building sector hold.
Stuart Hulme, director of savings at HTB, said there was 'still more to be done' to bring law firms in line with other sectors.
'It's understandable that legal SMEs may want to keep cash available considering the current political and economic uncertainty in the UK. However, if firms are keeping cash to one side, they need to achieve consistent, competitive levels of interest to make most of every £1 saved,' he said.
'We encourage legal SMEs to compare products available on the market at the moment. For example even putting away money for just 120 days can alleviate the rate of interest achieved.'