Stubborn inflation, consistently constrained access to finance, and a recent Budget that hasn’t quelled concerns about rising rates, taxation and employee costs are encouraging more SMEs than ever to reassess how they manage their cash reserves and get the most from them.
In the 12 months to 30 November 2025, total cash directly deposited by UK SMEs onto Flagstone, the UK’s largest savings platform, increased by 77%, from £1.6 billion to £2.9 billion. 7,500 UK businesses now manage over £5 billion on Flagstone’s cash savings platform – made up of deposits placed directly by businesses and those referred to Flagstone through introducers such as financial advisers.
What’s driving this growth?
Faced with an uncertain economic backdrop to grow, pivot or perhaps even sell their businesses, business leaders are increasingly turning to cash reserves for support. Industry research by Flagstone among 200 UK SMEs shows how these businesses have three key priorities when it comes to cash flow and cash reserves:
Protecting their cash against risk of bank failure
Many SMEs may be at risk of missing out on full Financial Services Compensation Scheme protection, as their cash is often held in a single bank account. Under FSCS rules, only up to £120,000 held with any one banking institution is protected in the event of a bank failure. Any cash above that threshold is not guaranteed.
Flagstone research reveals that two thirds (67%) of SMEs save their money with only one or two banks. Assuming that many of these companies have more than £240,000 in cash reserves, this would imply that a large proportion of UK SME’s cash may be unprotected. This issue would be particularly pronounced among larger SMEs: 99% of companies with £500,000 to £1 million in cash hold their funds with four or less banks, indicating that as much as 52% of their cash reserves are unprotected.
Generating income from cash reserves
As access to finance remains limited to many, there’s a growing need for SMEs to explore alternative ways to generate additional income and manage costs. An effective way is to make the funds at their disposal work harder for them. Flagstone has found that 51% of SMEs save nearly all their cash with high street banks, a category of savings providers that routinely offers less competitive rates of return.
A further 38% prefer a mix of challengers and high street banks. Data published by challenger bank and Flagstone partner, Allica, shows that SMEs are offered almost 3% higher savings rates by challenger banks versus high street alternatives. On a £100,000 deposit, the difference in rates can equate to nearly £3,000 difference in annual return.
Maintaining liquidity and access
A turbulent macroeconomic environment requires SMEs to remain nimble. Ensuring that cash reserves are readily available in part or in full is a crucial requirement of their financial plan. Allica also reports that 51% of SMEs’ total cash reserves (£264 billion) is kept, in part for this reason, in current accounts, meaning it can be accessed immediately when needed. However, most business current accounts pay no interest, whereas a top performing easy access business savings account currently offers in excess of 4%.
Lakhbir Sandu, CFO of Flagstone said, “Whilst the recent Budget did not throw many new and unexpected curveballs at UK SMEs, it also did not provide solutions to the problems these businesses are facing. Active management of cash reserves is going to be even more essential in 2026, building on the momentum we have seen in the last year alone. More SMEs need to make sure their money is secure, it’s working as hard as it can for them, and it’s liquid enough to access when needed.”
Flagstone for Business savings platform is specially designed to help SMEs achieve and fulfil these three priorities at once:
Security: An average Flagstone SME customer saves around £700,000 across seven savings accounts, and with more than 40 banking partners offering business savings accounts on the platform, an SME can save almost £5 million and enjoy FSCS protection over it all. 96% of SMEs with up to £500,000 deposited on Flagstone enjoy full FSCS protection.
High rates: Flagstone consistently offers market-leading SME rates. 15 of the market’s top 20 six-month fixed-term business savings accounts are currently available on the Flagstone platform.
Liquidity: On average, SME customers hold 42% of their Flagstone savings in easy-access accounts and 14% in notice accounts. This means that these customers maintain instant or near-instant access to large proportions of their cash. Of the 44% of cash that’s placed in fixed-term accounts on Flagstone, 3-month terms are one of the two most popular durations, again equipping savers with flexibility over their cash.
Sandhu added, “Time-poor, pressured SME leaders are crying out for solutions that make financial management easier and more lucrative. The appeal of convenient, time-efficient and protected cash management – that cash platforms provide – is spreading fast among UK SMEs.
“Much of Flagstone’s adoption by UK businesses has been driven by word of mouth, simply because the formula works and businesses love using it. As external pressures continue on UK SMEs – the backbone of our economy – we’re equipping ourselves to serve more UK SMEs with the support they deserve to make sure every penny works hard for them.”
Relied on by hundreds of thousands of individual and business savers since 2015. Today, the platform handles more than £18 billion for its individual and business clients, earning them over £500 million in interest last year alone. Flagstone’s platform is specially designed to reduce the admin burden of managing cash savings, while maximising interest income. It provides UK SMEs with instant access to more than 250 savings accounts from over 40 regulated, authorised banks. Businesses can deposit and move spare cash, between multiple banks, and withdraw it with minimal effort through an app and a single login.
