The Essentials of Business Banking
Here we examine the typical range of services offered to businesses by high street banks. At first glance you may feel that all banks offer roughly the same level of services, but take care to read the small print carefully and establish which offers the best service. This article should hopefully provide you with some ideas as to things to look for and some questions to ask the bank before you open your business account.
Do I need to open a business account?
All the major high street banks have significant numbers of business customers as well as personal banking customers. Their business customers range from sole traders with very small levels of turnover to the very largest multi-national corporations. Opening a separate business bank account is mandatory if your business is a limited company, and for sole traders and partnerships it is strongly recommended that you open a separate account instead of using your personal current account for business activities.
What account facilities will be available?
When approaching a bank, you can expect to be offered a suitable account for your size and type of organisation. You can also expect access to the same facilities as with a personal account, including debit cards, credit cards, chequebooks, 24 hour cash withdrawals, overdrafts and telephone and internet banking.
Business Managers and Business Support
Banks usually allocate customers a dedicated Business Manager or similar, who can advise on how to formulate a business plan and how to get started, and on matters relating to running your business once up and running. Services may include access to business seminars and training programmes in business skills, some of which may be offered free of charge.
You are likely to find that your bank can help in areas such as:
- Strategic planning
- Securing start-up funding
- Sales and marketing
- Cash flow and financial management
- Use of information technology
- People management
- Relationship management with suppliers, clients and other key personnel
Your Business Manager may also be able to advise on asset finance, i.e. loans to purchase new assets; invoice finance, i.e. loans to cover delayed payment of invoices; and other loans. Banks are more likely to provide funding for asset and property purchases than they are to fund regular operating costs, such as salaries.
Unlike personal current accounts, it is normal for banks to charge for certain payments made in and out of business accounts, and for other account services. But banks usually offer free banking for a specified time after opening the account, typically two years. Charging structures and levels will of course vary between banks, and asking about these charges may be a key question to ask when comparing providers.
Optional extra business banking products
Banks will offer a range of insurance products suitable for businesses, including buildings insurance, vehicle insurance, employer liability insurance, professional indemnity insurance, business interruption insurance, legal expenses insurance and personal accident insurance. You are of course free to shop around for these insurances – they do not need to be arranged via the bank where your business account is held.
Other areas where you have a choice between accepting the services offered by your bank and going elsewhere include business wealth management services and staff pension scheme provision.
Simon Grant writes on behalf of Ulster Bank, providers of small business accounts.