Commentary by Dovilė Bansevičienė, Chief Commercial Officer at SME Bank

An overnight deposit is a financial tool that allows a business to earn interest on its current account balance without losing the ability to access those funds at any time.

How does it work?

The principle is simple: at the end of the day, the funds in the company’s account are lent to the bank overnight. In exchange, the bank calculates interest on these funds, while the money remains accessible in the current account at any time for all business needs, such as paying suppliers, taxes, or payroll. Most importantly, the entire process is fully automated; once the agreement is signed, the account balance is recorded every evening and interest is applied automatically.

Unlike a fixed-term deposit, where early termination often leads to the loss of earned interest, with an overnight deposit, the accumulated interest remains in the company’s account.

Many businesses lack the motivation to put their money to work simply due to the misconception that it is a complex process. In reality, it is one of the simplest ways to generate a return without taking risks or losing access to funds when they are needed most. Currently, the annual interest rate for this type of deposit at SME Bank reaches up to 1.6%. Even a modest interest rate is better than zero, as a mature business evaluates not only direct costs but also lost earning opportunities.

Accessible to more than just large corporations

There is still a prevailing belief that overnight deposits are only available to large companies. At major banks, the minimum amount required to start earning even symbolic annual interest (around 0.1%) can indeed reach several tens or even hundreds of thousands of euros.

However, specialized banks have adapted this tool specifically for small and medium-sized enterprises (SMEs). Here, the minimum threshold is lower and the interest rates for smaller deposits are more competitive. For example, SME Bank offers annual interest rates of up to 1.6% for companies that open an account and sign an Overnight deposit agreement, provided the balance exceeds 10,000 EUR. This interest is calculated from the very first euro.

Practical example: By maintaining a balance of 50,000 EUR at a 1.6% interest rate, a company earns an additional 800 EUR per year. This amount can cover bank fees, accounting software subscriptions, or other administrative expenses.

Funds in a current account are vital for SMEs. However, even this capital can earn interest if it is put to work while the business rests. Funds held idle in current accounts lose value due to inflation; deposit interest helps mitigate this impact.