COMMENT
Give Your Business A Helping Hand

Napoleon once described Britain as a "nation of shopkeepers".

That's not a bad description, given that roughly half of all UK employees work for small- and medium-sized enterprises (SMEs), defined as those with fewer than 250 employees. Indeed, ninety-nine out of a hundred UK businesses fall into this category, including the small-but-beautiful Motley Fool!

Building a successful business can be a hit-and-miss affair, with around 30,000 firms closing down every month. However, around 50,000 businesses are created each month at present, so the overall stock of businesses is growing strongly.

Unfortunately, one thing that many small firms suffer from is poor financial management. They can be let down by poor cash-flow management; being under-capitalised (so they run out of cash); the loss of a major customer; or by bad debts. Indeed, these and other factors mean that the majority of small businesses cease trading in their first four years.

Alas, most businesses make a crucial mistake before they even start trading: they choose the wrong business bank accounts. Although the best deals are usually found elsewhere, the majority of small businesses opt for the perceived security and reassurance that comes from being with a big bank. The big banks offered poor deals to their business customers until two years ago, when the Competition Commission ordered them to stop making excessive profits from these customers. Although they have taken steps to clean up their act, their business accounts still aren't a patch on those topping the Best Buy tables.

Sadly, businesses seem to be as reluctant to switch banks as personal customers are. Despite the greater financial rewards on offer, the vast majority of small firms have never switch banks, with less than a third of small firms having done so. This means that most businesses aren't enjoying the best tariffs available, and should therefore shop around for lower charges and more attractive interest rates.

For the record, the Fool's Business Banking centre is sponsored by Bank of Scotland, whose account tops Moneyfacts' Best Buy table for business current accounts. It pays 2.75% a year before tax on credit balances, with no transaction charges on the first hundred cheques each month if you keep at least £5,000 in your account. What's more, Bank of Scotland pays attractive tiered rates on its no-notice Corporate E-Business Deposit Account, ranging from 3% gross a year on £5,000+ to 4.35% on £100,000+. You can use Halifax and Bank of Scotland branches to manage both accounts.

Alliance & Leicester Commercial Bank tops Moneyfacts' Best Buy table for business deposit accounts. It pays 4.35% a year before tax on all credit balances in its Business Instant Reserve account, which has no notice period.

Finally, if you can't be bothered to switch business accounts, stop and think for just a moment. You'd spend more money on marketing if you believe that it would bring in more revenue. And you shop around for suppliers to boost your profit margins. So, why not improve your firm's profitability and cash flow by finding a bank account that better suits the needs of your business today? After all, earning more interest (or paying less interest and lower banking charges) is a lot easier than winning more customers!

More: Boost your business's income | Help for small businesses.

Cliff owns shares in HBOS, the parent company of Bank of Scotland and Halifax.