A business bank account is an essential item for a small business to have. Using a business bank account, you can separate your personal and business finances and manage them effectively. This causes less confusion and means you can keep track of your business expenditure and income easier.
If you already have a business bank account, it may be time to consider other options and do some shopping! As you will see below, there is much to gain from switching business bank accounts.
In this guide, we look at the pros and cons of switching, and the considerations you should make.
Quick find…
- Reasons for switching business bank accounts
- Considerations when switching business bank accounts
- Overdraft limits
Reasons For Switching Business Bank Accounts
In most instances, we prefer to stick with what we know and what we have. It’s human nature – sticking with a current service or product is convenient. It means less hassle, and also means you don’t have to jump into the unknown.
However, with business, it really does pay to consider your options and shop around for different things like business broadband, bank accounts and credit cards. Switching business bank accounts can be particularly beneficial and help you manage your finances more effectively.
We have listed the main pros and cons of switching business bank accounts below:
Pros
- Could lead to improve business finance management
- Potential for lower monthly service fees
- Better rates and availability of payments and withdrawals
- More features and tools for money management
- Improved customer support and financial advice
Cons
- Uncertainty of swapping to a new, unknown provider
- The hassle and stress of switching the account
- Standing orders, direct debits, and other payments may have to be re-issued
The main drawbacks are the time and effort involved. You have to apply for a new bank account and close the old one. Also, you may have to sort things like direct debits and standing orders.
You should however consider that this only has to be done once. Once you have found a better business bank account, there will be an initial effort involved, but after that, it’s smooth sailing!
The benefits are potentially many. You can hopefully find a business bank account that gives you better control over your money. Also, you can find a provider that gives lower transaction fees, higher withdrawal limits etc.
Switching business bank accounts could also lead to a better overdraft arrangement, improved availability of customer support, and even financial advice. You can effectively make better use of your money and hopefully get more value from your account.
Considerations to Make When Switching Business Bank Accounts
Now that you understand the pros and cons, there is a range of factors you must also consider. The best business bank accounts typically have a host of features that you must compare. Only by comparing the features can you get a clear idea of if there are any better options available.
Overdraft limits and arrangements
Oftentimes using an overdraft is unavoidable, or it can greatly help when your cash flow is tight. As a result, it is important to look at the overdraft agreements offered by different business bank accounts.
Some business bank accounts offer no overdraft facility at all. Some offer a fixed overdraft limit with associated late payment fees etc. Others don’t offer an overdraft as standard, but you can apply for one if needed.
Consider if you think an overdraft facility is needed. From there, you can look at the different arrangements and tariffs the business bank accounts offer and choose accordingly.
Monthly fee
Most business bank accounts and bank accounts for startups charge a monthly service fee. This is usually a small monthly fee used to cover administration and running costs. First, check if you are currently paying a service fee.
You can then compare business bank accounts and see if there are any cheaper options available. There are business bank accounts that have no service fee too.
Also, bear in mind that cost should not be the only factor. In the larger scheme, the monthly fee is a minimal expense. If you can save money while switching to a digital bank account with better features, fantastic! Alternatively, if switching to a superior business bank account with better utility means paying a few £ more, it could also be worth it.
Payment/Transaction Limits & Fees
All types of bank accounts including digital banks typically have transaction limits and fees. These can include:
- ATM withdrawal limits
- ATM withdrawal fees
- Internal transaction fees
- Payment limits to other accounts
- Payment fees for transactions to other accounts
- International withdrawals
- Conversion fees for foreign currency
Understanding your current fees and limits, and comparing them to other business bank accounts is imperative. This is one of the areas where you can make the biggest changes. For example, you could find a business bank account that offers higher ATM withdrawal limits, and no fees on international payments.
Create a list of the payment limits and fees for your current account. You can then compare them with the offerings of other accounts.
Additional Features
Most business bank accounts also offer additional features. These include:
- Mobile banking and mobile account management
- Analysis tools to track your spending
- Financial advice and support
- The ability to set up recurring payments
Features like mobile banking and analysis tools can be incredibly useful for businesses. They can give greater flexibility and control over your financial decisions.
Look at the features your current business bank account has. What features do you still want to have? And are there any new features you would like to utilize from a new business account?
Look at Your Options Today and Potentially Get a Better Deal for Your Business
We hope you have found this guide on switching business bank accounts useful. It is certainly something to consider. You have nothing to lose by looking at the different options available.
As seen above, you can often benefit from introductory offers, or simply by scouting around and making comparisons. It doesn’t always pay to simply stick with the provider you have – especially if you want to save costs and make your business run more efficiently.
Our guide to the best digital banks will help you choose which business bank account might be best for you.
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If this guide to switching business bank accounts helped you, please recommend DigitalSupermarket.
