While this vast sum primarily reflects the normal ebb and flow of cash into and out of bank accounts, the magnitude indicates that many businesses possess substantial amounts of surplus cash, which could be £250,000 or more depending on business size and profitability.

Murdoch MacLennan, Partner at Azets, warns that “whilst cash is King, it does carry its own risk”.

Murdoch MacLennan

He said: “Risks include the potential for internal and external fraud, cyber-attack, threats of litigation with the cash effectively being ring-fenced by legal action, unexpected demands for payments and the insidious loss of value from inflation and inertia.

“Critically, first and foremost cash should be protected with the company structure and internal controls reviewed to ensure they are fit for purpose.

“Surplus cash can then be focused on strategically important activities, for example, mergers and acquisitions, new plant and machinery, staff recruitment and retention, product R&D and tax-efficient pension contributions. Reduction of debt should also be a major focus, particularly given that the cost of borrowing has risen significantly.”

Mr MacLennan added: “The volume of cash in Scotland’s businesses reflects a vibrant SME economy and whilst surplus cash is very desirable, it must be managed as an asset and safeguards put in place to minimise the risk of loss”.

Azets is encouraging any businesses with surplus cash to undertake a thorough review to ensure that it is protected and being used efficiently.

Mr MacLennan concluded: “Businesses will sweat their physical assets and capital for maximum returns, but frequently fail to approach their cash management in the same manner. As the economy tightens and consumer markets contract, this coming Autumn is a good time to take a fresh look at surplus cash and make sure it is being used wisely.”