How can I find the best bank account for my business?
Posted on by Rich Wells
Estimated read time: 7 mins
There’s no denying that a bank account is a must, be it for a business, or an individual. Long gone are the days of carrying around a coin purse, the majority of things are paid for by a little piece of plastic now, with that magnetic strip and the little chip that you sometimes have to give a little rub for luck, unless of course you enjoy the luxury of contactless. Whether your card is blue or black or anything in-between, do you know if the bank it’s supplied by is giving you the best possible deal for you and your business?
Shopping around for a good deal isn’t an unfamiliar concept for the majority of us, however, when it comes to a business bank account, you may be thinking well, that’s actually something I’ve not considered before. Perhaps you like that card that you’ve grown familiar with and that big brand you see advertised on the TV. Actually, it could be beneficial to shop around a bit and even potentially broaden horizons, walking off of the beaten track and not being afraid to consider a provider that isn’t a household name. Whatever you do, it’s good to compare and find the best deal for you. Challengers to the bigger banks are emerging regularly, so now is as good a time as any to start exploring the possibilities out there.
Before we move on, it’s important to suggest the main benefits of switching and what to potentially expect with relation to money. Broadly speaking, the incentive isn’t so much laying in interest rates. The most significant differences involve standing* and transactional charges**(1).
The key issue cited by business owners about their current business bank account was to do with transparency. They claimed that more detail is required upfront and it should be personalised to them. The information not only needs to be more specific, ultimately, it needs to be a lot more honest. If there’s a fee for something, you want to know about it, if the rates vary dependant on the transaction amount, you want to be informed of this before you sign anything.
When comparing banks, researching online is usually the best place to start. Looking on comparison sites can be a great launch pad, with a wealth of information that’s already been collated being presented in one place in an easily-readable format. That isn’t to say that the comparison sites have done all of the legwork for you, so be sure to conduct multiple searches and don’t be afraid to get specific. From there, you can shortlist attractive prospects and really drill down on the finer details and if needs be, don’t be afraid to ring up and speak to someone to get the information you need, but don’t be talked into anything there and then.
Sometimes you may need to take a step back, really probing at the information you have in front of you and weighing up the pros and cons versus your objectives as a business. If you write out your aims and objectives and highlight areas where bank charges and the like play a part, it may help you to plan out a more bespoke package that you can seek which could suit you better in the long run.
If you do get a better deal, that’s excellent. There really is no harm in trying, whilst it can seem a time consuming and laborious process with limited gains on the surface, as you start to dig deeper you’ll potentially start to find and notice the real differences and experience how being a little savvy can go a long way.
While key benefits can come in the form of savings, there may be additional benefits too as you manage to improve your position and better your finances. Whatever you choose to do going forward, remember, you’re the customer here. Know your rights, be a little critical and keep the ball in your court. What works well for one business may not be the best option for you, so try to adopt a critical approach.
Credit scores can play a part when it comes to business bank accounts. Having a healthy business credit score can assist you in securing better business bank accounts and open up the doors to preferential rates. If you have a low business credit score, accessing financial services can seem like a real struggle. There are a number of ways to monitor your business credit score and gauge your chances of success with your application. Don’t forget to consider taking a look at your business credit report before sending out an application, so you can ensure that your business is seen in the best possible light when you approach lenders.
To find out how we can help you to understand and monitor your business credit profile, please click here.
*Standing charges are fees charged either monthly or quarterly by some banks, either as a replacement or additionally to transaction charges. As part of your comparison, it’s recommended to think about your own usage of the account and pay specific attention to standing charges alongside transactional fees. If, for example, you’ll be making numerous transactions by cash or cheque on a regular basis, accounts with standing charges, but no transaction fees, may be the optimum choice. On the other hand, if your payments are solely electronic, opting for accounts with transactional charges, but no standing charges, may be the best option for you.
**Transaction charges are fees charged by the bank for handling credits and debits, often made on physical transactions, such as cash or cheque payments, but also, they’re for automated payments (standing orders and direct debits). It is noted that charges for the automated payments may be cheaper, so that’s a further consideration (2).