Making the Switch: Changing Business Bank Accounts
Deciding to change business bank accounts can be a daunting task, but also a necessary one as your company evolves. This guide will walk you through when to consider switching banks, how to choose the right new bank, key steps in the transition process, and tips for ensuring it is as smooth as possible.
When Is It Time For A Change?
There are a few key signals that indicate it may be time to switch business bank accounts:
Excessive Fees
While some fees are to be expected, excessive or surprise charges for transactions, overdrafts, withdrawals, deposits, and account maintenance can quickly add up. If you find your business is shelling out too much money in fees every month, it likely makes sense to shop around. Carefully compare the fee schedules and structures at other banks and credit unions to find one that is more budget-friendly.
Account Limits
If your transaction volumes are growing beyond what your account limits allow for, this restricts your business operations and growth. See if your current bank offers customizable tiers or if switching to a new provider with higher and scalable limits suits your needs better.
Lack of Business Products
You may find over time that your bank does not offer important services that you need. If you require additional financial products but your current provider falls short, changing institutions can open up more possibilities tailored to small businesses.
Poor Customer Service
Having a responsive banking partner you trust is extremely valuable. If you’re frustrated by long wait times, confusing answers, lack of availability, or representatives who seem dismissive of your concerns, these are all good reasons to take your money elsewhere. The right bank for your company prioritizes top-notch service.
Difficulties Managing Accounts
In today’s digital age, you want to be able to bank anytime from anywhere conveniently using online portals. If your bank falls behind technologically with limited digital functionalities, switching to a more progressive provider can simplify managing your finances.
Choosing Your New Bank
Take stock of your must-have features, growth goals, and budget when researching a replacement business bank account. Key aspects to compare include:
- Interest rates - Review the interest rate offered by your current checking account and compare it to alternatives. For more information, see the following article: Do Business Checking Accounts Earn Interest?
- Account tiers available - Review options for transaction volumes and cash needs.
- Fees and terms - Understand all monthly costs, withdrawal/deposit/transfer fees, and balance requirements.
- Scalability – Can their accounts and services grow with your company long-term?
- Accessibility – Do they offer a robust digital platform?
- Reviews - Feedback from other business banking customers.
Weigh the pros and cons carefully for your own scenario before selecting the best match.
Handling The Logistics of Switching Business Accounts
First, gather all documentation the new bank requires like government IDs, EIN, and business formation papers. Then complete their application and open your account(s), making an initial deposit. Take advantage of any switch kit resources offered for transitioning payments.
Here are key transaction types to tackle:
Payroll & Employee Direct Deposits
Update payroll provider with new direct deposit details effective on next scheduled pay date. Avoid closing old account until after payroll transfers to avoid funding gaps.
Online Sales Channel Payouts
For marketplaces, payment processors and buy now, pay later programs, connect new bank account within their portal to change where funds get deposited going forward.
Subscriptions & Automatic Payments
Download recent statements to reference all repeating auto-pays, debits and withdrawals. Update each with new account information to continue regular outflows without disruption.
Bill Pay Arrangements
Check expense tracking programs and reorder automated checks if needed. Confirm when existing scheduled payments will process before halting bill pay on old account.
Accounting Software Connections
Create new bank account on your General Ledger then connect to download transactions automatically going forward. Review rules to classify income and expenses correctly.
Vendor ACH Agreements
Contact any vendors pulling automatic payments from your old account to provide updated bank details. Monitor new account activity closely for smooth payments.
Once all connections are tested and working properly in the new account, close your old bank account following their procedures. Allow outstanding payments to clear prior to fully shutting it down.
Tips For A Seamless Business Bank Switch
Take It Slow
Rushing the process heightens risks of payment issues so proceed methodically. Build in plenty of buffer time when transitioning automated financial flows.
Keep Close Watch
Monitor account activity daily early on to verify accurate postings of deposits, bills, payroll and more across the transition period.
Leave A Buffer
Avoid shifting major lump sum deposits or payments right away. Banks often place longer holds on large initial transactions in new accounts, which can temporarily tie up needed operating funds.
Maintain Liquidity
Keep ample cash reserves accessible across both old and new accounts through the switchover to preserve financial flexibility.
Request Assistance
Utilize bank support tools like switch kits and account transfer letters to ease notifying vendors and customers about your new banking details.
By proactively preparing, carefully orchestrating the switch, and staying vigilant, you can smoothly transition to the right business bank account partner that can scale along with your enterprise. Taking methodical steps will minimize disruption allowing you to get back to growth-oriented initiatives quickly.
Apply Now
Click the button below to apply for a business checking account from FirstBank, a Tennessee corporation; Member FDIC.