How UK SMEs Can Earn Interest on Idle Business Funds

Idle cash is a hidden cost for many UK SMEs. In a world of higher base rates and persistent inflation, leaving buffers at 0% is simply forgone income. This article explains a low-friction way to keep your operational cash close while putting the rest to work - all without lockups or changing how you pay your bills.

Every business keeps some money unused: a buffer for bills, VAT returns, or unexpected costs but while it waits, that money often earns little or nothing. Most UK companies don’t question this. The balance is there, it’s available, and that’s considered good enough.

Many businesses find it useful to think of their funds in two parts: active and parked. The operational cash stays close, while surplus can be held in flexible accounts that may earn interest without locking access.

But some teams are starting to ask more precise questions. What percentage of our cash stays untouched for more than a month? How much of it could work harder without introducing risk? What is it actually earning now?

In early 2025, a university-linked SME research programme published a short paper showing that more than 70% of small UK companies kept over 40% of their average monthly balance idle for at least 30 consecutive days. Less than 10% of respondents knew what interest, if any, that balance was earning. And among those who asked, most received generic or unclear responses from their providers.

The report concluded that this wasn’t a question of yield. It was one of visibility. Businesses weren’t making bad decisions because they didn’t realise there were better ones available.

First, review what you’re already doing

1. Review your last 90 days of balance

How much cash sat above your average outgoings - untouched? Was it temporary, or consistent? If the number stays high over time, it’s probably unused working capital.

2. Separate your active and passive funds

Most teams run all operations through a single account. Instead, consider separating:

• one account for payments (bills, wages, taxes)
• one for stored capital (buffers, VAT set-asides, tax reserves)

This helps clarify what’s being used and what isn’t and allows the passive portion to start earning.

3. Check your current interest rate

Many business accounts in the UK still pay between 0% and 0.1% on instant-access funds. At the same time, inflation remains above 2.5%, which means holding cash in non-interest setups results in steady loss of value.

4. Ask your provider direct questions

Most institutions don’t make idle-fund rates obvious. Questions businesses often ask include:

• Do you offer yield on funds not actively used?
• Is it possible to earn interest without lock-ups or moving accounts?
• What’s the rate today, and how often does it change?

The answers show whether a provider is set up to support active cash management, or whether balances simply sit as passive deposits.

Additional angles worth checking

Some businesses link their “buffer” funds to quarterly tax events or dividend cycles. With that comes the difficulty of holding everything in one account - this makes it hard to separate what’s operational from what’s delayed spend. From a tax management perspective, segmenting accounts also improves audit readiness, especially if funds for VAT or Corporation Tax are labelled and isolated.

Others build time-based rules: if a sum hasn’t moved in 30 days, it triggers a check. If it hasn’t moved in 90 days, it’s reassessed. Some of those balances stay put. Some of them are routed into interest-bearing instruments depending on liquidity needs. Either way, knowing what the thresholds are means fewer reactive decisions.

Some banks now react to rising customer interest in this topic with templated products. But they rarely surface them unless asked. If you don’t bring up the conversation, it’s unlikely they will.

Options for Interest on Idle Business Funds

Once you’ve separated active cash from parked cash, match each slice to the right “home”. The options below trade instant access for yield in different ways. Treat the rates as indicative (our survey was done in Q2 2025) and confirm fees and eligibility with your provider. The aim here is to keep money available when you need it while putting the rest to work.

A practical way to view balances is in three buckets: immediate spend, planned but not urgent, and idle reserves. The product types below typically align with those buckets, offering different trade-offs between access and yield. Businesses can then match liquidity needs with the appropriate option.

• Standard current account (old, legacy type)
• Flexible savings (instant access)
• Notice accounts
• Platform-native yield accounts (offered by selected digital providers. Not all platforms support this)

In a 2025 independent survey of non-lending business banks, Ampere was recognised among the leaders for interest accessibility, based on how easily users could activate yield on idle funds without sacrificing liquidity (source available on request).

This article is for information purposes only and does not constitute financial advice. Rates and product availability change over time and depend on provider eligibility. Businesses should consider their own circumstances and seek independent financial advice where appropriate.