How to Switch Business Bank Accounts
A business bank account can help you manage your income and outgoing costs, but are you getting the best deal for your business? Switching business bank accounts can bring huge benefits.
If you’re like many business owners, your business bank account is something you haven’t changed since you first opened your company. Perhaps you thought about switching business bank accounts when your bank fees went up, but at the end of the day it’s just all such a big hassle – isn’t it?
Switching your company’s bank account does require some thought and planning, but there are a lot of regulations in place now that mean banks will take some of the burden off of you.
And when you consider that business bank accounts for switchers can bring big savings for your business, it could be worth exploring.
Why should I switch business bank accounts?
Maybe you are perfectly happy with your business bank account. But with a bit of research, a lot of people discover that the sector has evolved to offer a much broader range of services and they could be better served by a switch.
For some people, customer service just hasn’t quite cut it with their current provider. Others are being hit with unnecessary fees on their account.
Over time your business circumstances evolve; what worked for you when you first set up the company might no longer be a good fit. All of these are viable reasons to switch business accounts.
Do I need to switch providers to get a better deal?
Switching won’t be the right move for everyone. So, it's a good place to start by talking to your current provider before you switch to let them know that you’re not happy.
See if they are willing to resolve the problems that you’re experiencing. If the solution they offer isn’t suitable, then maybe it’s time to open a new business bank account.
Remember that there is sometimes a case for having multiple business accounts, read our ‘how many business bank accounts should I have?’ guide to find out more. This could mean that rather than switching, you explore new providers for different accounts, based on their offering.
OK, I’m switching. How do I prepare?
Switching business bank accounts is a relatively smooth process, but it is important to have your paperwork ready once you have researched and chosen a new provider.
Here’s a list of the essentials:
- the name of your business
- history of your trading address (or addresses)
- business details (including current banking details, registration number, date of incorporation if you are a limited company)
- details of any debts
- personal details about yourself and other directors
Many business bank account providers will now allow you to complete your application online so with the right paperwork to hand you will be well on your way to switching.
The next bit of good news is that thanks to the Current Account Switch Guarantee, once the paperwork is received and approved, the provider will handle everything in switching the account over from your current provider. The Current Account Switch Scheme is only available for small businesses.
More than 40 UK banks and building societies have signed up to the Current Account Switch Guarantee so you should be in good hands.
With the plan in place, your new bank will agree a switch date with you for when the account will officially transfer over. This is typically around seven working days after the new account is approved and opened, and on this date you can log into your new account and start using it to make and receive payments.
Remember, to look at the specific transfer timeline for the account you switch to.
What is the advantage of switching business bank accounts?
There are several advantages to switching to a new provider, as briefly mentioned above, you might be looking for better customer service or a better deal for your business account. Here are a few more details.
1.) A ‘fee free’ introductory period
To entice people to switch, providers may offer a ‘fee free’ introductory period, in which any monthly fees are reduced or deducted for a certain period of time.
Whilst this may seem appealing initially, remember that it will not be fee free forever, so make sure to check the fees and interest rates once the introductory period finishes.
2.) Better customer service
You may be unsatisfied with your current provider’s customer service and this is the reason you would like to switch. Some providers offer 24-hour customer service, which can include an online ‘chat’ system.
This typically is more time efficient for business owners and means you are not waiting ‘on hold’ to speak to a customer service representative. Some providers will also nominate a dedicated Account Manager to look after your business. Their role is to help tailor the package to suit your business needs and provide support and advice.
3.) Additional services
For those who are in the research stage and thinking of switching, you will notice that different providers offer different services and add-ons. Depending on your business needs, this will be an important factor in making your final decision.
Think about the standard business account services on offer and check if you need them and if your new provider offers them.
Consider the kind of services you need for your business:
- Standing orders
- Direct Debits
- Bank transfers
- Access to a debit card
- Access to a credit card
- Access to an overdraft
- Mobile app
- Telephone/online banking
- Interest paid on balances
- Accounting tools
In addition to the above, you may also be looking for a provider that offers free international transfers if you are trading abroad, or an increased overdraft limit or business loans to facilitate your business growth.
Finding out exactly what a provider can offer you will help you distinguish which account best suits you and your business.
Are there any disadvantages to switching providers?
There are several misconceptions about switching business bank account providers. Chief among these is:
- Will it interrupt my business activity?
With the Current Account Switch Guarantee, the move between providers couldn't be easier. Your chosen provider will handle all the transition work, leaving you to focus on growing your business. The Current Account Switch Scheme is only available for small businesses.
Under the guarantee, 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.
There will be some admin work to complete once you decide to switch providers, albeit this is more of a timely task than a disadvantage to switching. You will need to update your banking details on any invoicing or important documentation once your account has been switched.
Any third-party services/providers who you work with regularly will also need to be updated on your new account details.
How can I compare different business banking deals?
Speaking to providers directly will give you an insight as to what they can offer to you and your business.
But a good place to start is to research the market and compare business bank accounts online to check what’s out there.
Take control of your company’s finances and make sure the providers you’re working with are as fit for purpose today as when you first started your company.
Finance Director at NerdWallet UK and business adviser to SME's Nic is spokesperson for small and growing businesses with a strong understanding of the financial needs of business Read more