It’s easy to become disillusioned with your bank. Maybe they declined a loan application or their service just isn’t up to scratch. However, deciding to change banks isn’t something to be done on a whim and there are several factors you need to consider before taking the plunge. This article will help you prepare for a bank break-up and how to choose a new partner for your business.
Assess Your Needs
If you’re set on switching banks, you need to analyse why a change makes sense for your business. Ask yourself a variety of business questions to determine whether the move is right, such as:
- What do I want from my banking relationship? Prioritise what’s important to your business from a banking perspective and whether your current bank can provide it. Better the devil you know
- What are the risks of changing banks? The changeover will be drawn out and won’t be without its hitches. Why is a new bank important now?
- Do I need a bank? Take the time to investigate alternative businesses, such as credit unions and specialist lenders – some of which can take care of your needs
Another thing to consider is your own changing needs. As your business grows, it might need the capabilities of a larger institution, or one that facilitates your business model more simply. For example, you’ll want to be with a tech-savvy bank if you’re an e-commerce business. Also, ask your network for opinions on their banking partners to get some new ideas.
Map Out Your Future
You should view the change of banks as a long-term manoeuvre, so consider where your business might be in 10 years and how your bank will factor into your company’s plans. Short-term incentives such as no fees are seductive, but they can be a bit deceptive in the long term.
Spend some time shopping for banks that specialise in small business. Call and request information specific to your business needs. You want to find a bank that is ready to grow with you and provide you with all the support you could possibly need over the next 10 years. In the future, you might need a large line of credit as you expand and you’ll want to be sure your bank is with you.
Making the Transition
First, ask your bank if they offer switch over advice and see whether they can guide you through the process. Sometimes this costs money and sometimes it doesn’t, but it never hurts to ask.
The next phase will be to inform your vendors and clients that a switch is about to happen, particularly if you’ve established automatic payments with them. Most banks have a generic letter you can send out with the new details to make life a little easier.
Don’t forget to tell your accountant and software provider of the new account details to prevent any hitches in the future. Remember to update your paperwork and close your old accounts.
There you have it – you’re on your way to breaking up with your old bank. Just remember that when your old bank shows up outside your apartment with a boom box playing your song, stay strong! You’re a totally new business now.
This information is factual only and is not intended to to imply any recommendation about any financial products or constitute advice. You are responsible for consulting with your own professional tax advisors and financial advisors concerning specific tax or financial circumstances for your business. Intuit disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your business finance. If you have questions regarding accounting issues specifically related to your industry or your business circumstances, you should consult with your own professional tax advisor, accountant, attorney, industry expert or professional association.