smallbusiness.co.uk: Helping your business think big

Small and medium-sized enterprises (SMEs) are currently holding onto their cash rather than investing it, according to new research.

A study conducted by the Bank of Scotland highlighted that three-quarters of business owners are reluctant to make any immediate decisions concerning their finances due to the uncertain economic climate.

Over the upcoming year, 38 per cent of those questioned plan to put aside cash for future investment in business, while 37 per cent are saving money in a bid to earn interest.

A quarter of the 1,000 companies questioned stated they will put money aside as insurance against further economic issues.

Commenting on these findings, Peter Wood, head of strategy and products at the Bank of Scotland's business banking division, said that it is vital SMEs find the best place for their cash.

'Making the right investment and savings decisions can make a huge difference to the bottom line of any business, particularly SMEs where the line between profit and loss can be marginal,' he added.

In related news, the Forum of Private Businesses recently asserted that high fuel costs and an inability to absorb these themselves means that smaller business are having to pass on these costs to customers and lose their competitiveness.

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