7 Tips to Make the Most of Your Business Bank Account
Smart business banking can transform your business. It all starts with finding a provider who you can trust to support your goals.
Your business bank account plays a crucial role in the running of your company. Any suppliers and staff that you pay will get paid from this bank account. And more importantly, any money you make will end up in this bank account.
But many business owners don’t think about their business bank account for years after first opening one. If you’re in this camp and you’ve pushed on for years, or even decades, with the same account, it’s not too late to rethink.
We’ve pulled together 7 top tips to help you make the most of your business bank account, to support your company now, and in the future.
1. Understand the difference between personal and business bank accounts
In the first days of starting your business it can be tempting to run things through your personal bank account when your first few invoices get paid.
There’s nothing wrong with this (so long as you’re a sole trader and not a limited company) but you might want to look into how to open a business bank account sooner rather than later.
A clear view of your finances – both income and expenses – is critical once your company gets going. Trying to keep track of this through your personal current account, along with all of your household expenses like mortgages, credit card payments, grocery shopping and entertainment, can get very complicated, very quickly.
Starting off with a business bank account, on the other hand, keeps everything separate. This makes accounting and forecasting straightforward and keeps a nice clear line between your activities. If you’re still unclear if you need a business bank account, read our do I need a business bank account guide.
2. Take advantage of introductory offers
To entice in new customers, providers will typically advertise an ‘introductory’ offer, in which fees are deducted or reduced for a certain period of time.
This can range from 18 to 25 months typically, based on the provider and the offer. When you’re opening a business bank account or looking to switch business bank accounts, it could pay to make use of offers like this.
A period of low or even no fees can be a big help when it comes to growing your business. But remember, while taking advantage of introductory offers is smart, these deals won’t be in place forever, so make sure you take a look at the terms you’ll be held to when the introductory period finishes.
3. Make use of Account Managers and customer service
Making important financial decisions for your business can be daunting. If you find it all a bit much, look out for a business bank account provider that offers a dedicated Account Manager as part of their package.
The role of the Account Manager is to provide assistance with your account and offer information about supporting products and services. Don’t forget they have a secondary motivation to keep your business with them, but they should also be there to help you make the most of the services on offer.
If your provider doesn’t offer a dedicated Account Manager, they should still provide in-branch, online or telephone support. Look for a provider who offers 24-hour service or an online chat feature to resolve any queries quickly and efficiently.
4. Listen to reviews and recommendations
Would you read reviews on the latest smartphone before you made your purchase? Why would you treat your business banking services any different?
Choosing the right provider for you is paramount; these will be the people who you are trusting with your business finances. The best way to learn how a provider treats their customers is through reviews and recommendations.
Companies themselves tend to only focus on the positive aspects of their service and until you open your account, you will be none the wiser to how true this is.
Speaking to friends, family members and other business owners, however, is a more reliable way of getting recommendations. If you don’t have a close connection who can advise on the service they received, then check out ratings and reviews online from other users on trusted review websites.
5. Know when to switch accounts
No matter how carefully you research your business banking provider, even the best relationships can come to an end as your priorities change.
Knowing when to say goodbye and move on is key. This will become a lot clearer once you’ve opened up your first business bank account and you understand which features are useful to your business and which might have sounded good, but in reality are unnecessary.
You might also become aware of certain business banking features that aren’t offered by your current provider, which is another reason to look into researching new providers.
If you do decide to switch providers for your business banking, the Current Account Switch Guarantee, a Government backed service which over 40 UK banks and building societies have signed up to, will help make it a relatively smooth process. The Current Account Switch Scheme is only available for small businesses.
Your new provider will handle all the transition work, leaving you to focus on growing your business. They will transfer over your balance and all active standing orders, Direct Debits and any other scheduled outgoing payments. Any additional interest or costs incurred during the time of the switch will be refunded as well.
6. Research challenger banks
In the first half of 2019, over 27,000 SMEs switched their business bank accounts to challenger banks. This raises the question; why are so many businesses switching their accounts away from the high street and to these challengers? And what are they offering that the traditional providers aren’t?
A challenger bank is a small, retail bank that offers an alternative to the ‘big four’ established brands. The majority of these challenger banks operate online and utilise the latest fintech, which means they can often provide a more flexible and specialised service to their customers, often at a lower cost.
With increased competition and no – or at least very limited – physical retail presence to account for, these challenger banks can negotiate better rates for their customers. They are also very tech focused, so you should be able to access your accounts from anywhere and connect to a wider range of services (for example, accounting software).
Challenger banks have stepped up to fill a gap in the market place so they’re focused on winning business away from the traditional established organisations. For new clients, this often means a focus on customer service and a wider array of solutions to suit different types of businesses.
If you prefer a more ‘human touch’ to your banking, challenger banks may not be the best route, but there’s never any harm in researching what they can offer!
7. Compare business banking deals
Finally, don’t forget how much power you hold as a potential customer, even as a small company. Research the market thoroughly and compare business bank account deals.
Start by working out what services will be of most benefit to your business, and look for a balance between the short-term wins of an introductory offer and the long-term relationships that you could build on in the future.
Careful consideration will help reassure you that you’re getting the kind of service and support you and your business deserve.
Peter reports on a number of areas in the personal finance sector, with a particular interest in supporting businesses and individuals in the UK services industry. Read more