Choosing your business current account is an important decision to make as quite often it is this bank that you will stay with for a long time.
Whilst changing business current accounts is much easier these days, the perceived hassle is off-putting.
We’ve put together a list of helpful hints and tips that you should consider when comparing business bank accounts. Whether you are opening a business current account for a new start up business or are looking to move banks because you want a better deal for your business.
You may even be one of the 25%* of business owners who are unhappy with your present business banking arrangements and want to make a positive and rewarding change by making a move. Whatever your circumstances, the following tips will help your decision.
Choosing the right business current account – start up businesses
Do your own desk research and don’t always be too influenced by your accountant or financial advisor. These professions sometimes receive commissions from banks for their referrals. Use our Business Current Account Calculator for impartial advice. We also have a demonstration, to show how to use the calculator.
Consider if you will require the support of a Business Manager. If you do then some competitive direct business current accounts where branch access is not permitted will not be available to you.
Determine whether you need finance or not. If you do then it’s important this facility is approved before making your current account choice.
Think about how you will be making deposits into your business current account. Will you be paying in lots of cash? If so, will you need a local branch nearby or a post office facility? Consider which bank is the most convenient for you.
If you will require the ability to take card payments then you will need a bank that can arrange merchant services for you. In most cases this will be offered by a third party provider, but the bank will be able to make this introduction.
Think about how you will conduct your banking. If this will be done in the evening then you may benefit from internet banking facilities or telephone banking that can be accessed at a time that suits you - not the bank.
Consider whether you will need a business deposit account or not. It’s handy to have a separate account to save for expenses such as VAT or Director Loan Repayments. Opening a deposit account at the start will save you time in the future, but remember the business deposit account connected to your business current account might not pay the best interest rates. Opening a business deposit account with another provider may earn you more interest – just make sure you know how long it will take to transfer funds between the accounts. Submit a request using our Deposit Rate Finder and find out exactly what rates the banks will be prepared to offer you, it takes 10 seconds.
Don’t be too swayed by introductory offers for lower or no bank charges for a set period of time. You may be surprised at the cost of your business banking when the standard tariff applies. Our Business Current Account Calculator works out exactly how much you will pay once these offers end.
Don’t be too hasty to give up credit interest on your business current account, you’ll be surprised at how much this might add up to over the year – the price of that new laptop you were looking at! Again our Business Current Account Calculator will work out an average of how much interest you will earn.
Choosing the right business current account – businesses looking to move business current accounts
Don’t just look at headline offers – make sure you compare business current accounts based on the individual requirements of your business, the type of transactions you make and the services you require. Use our Business Current Account Calculator to make a comparison.
Consider whether you do really need a Business Manager or a branch. It might make you feel better knowing that they are available, but there could be much better deals to choose if you opt to bank without these services.
Open your new account before you close your old one – this might seem obvious but it ensures you don’t disrupt your cashflow and that you only have to make the full switch when you are happy everything is set up correctly.
Let the banks move your direct debit information across for you. All banks are now obliged under the Financial Services Authority (FSA) to provide a list of direct debits within 5 days of receiving the request from your new bank.
Don’t be worried about the transfer not working out. The banks are hungry for your business and want to make your switch as effortless as possible. Make the switch and you could start to enjoy a more fruitful banking relationship sooner than you think.
* 1 in 4 businesses are not happy with their business banking provider Source: Mintel Small Business Banking, Finance Intelligence Report (Oct 2006).