Choosing a bank for a business is not the same as merely selecting one where you deposit your paycheck. The financial and operational stakes are higher, the needs are more complex, and quite frankly, a bad decision will cause more than an annual headache for years to come. Unfortunately, most business owners fail to appreciate how a decision will impact an operation on a daily basis until they’ve opened an account that doesn’t work for what they’re doing.
However, with the changing nature of business banking in recent years, what was once valued more highly than something else ten years ago may not have the same top-flight spot on today’s priority list. Thus, appealing to the general sense of what truly makes a difference will save people time, money, and significant frustration along the way.
Fees That Actually Matter
This is always where the discussion starts – and appropriately so. Business accounts typically come with many more potential fees than a personal account. Fees for monthly maintenance, transaction limits, wire transfers, cash deposits – the list goes on. In reality, what amounts to an acceptable monthly fee becomes exorbitant when fees for other transactions are added.
What most people don’t understand is that “free” checking for businesses is usually free relative to minimum balance expectations. Drop below the threshold one month – bam! – you’re paying extra fees for what you thought was a free account. Most businesses have fluctuating revenues. For this reason, meeting such steep minimum balances consistently is complicated and inevitably ends up racking up additional charges when owners least expect them.
Additionally, fee schedules deserve scrutiny. Some accounts only come with a certain number of transactions per month until they’re charged – and then charged again on a per-transaction basis. If a business involves processing lots of small payments or writing lots of checks, that fee will accrue quickly. If a business churns out 200 transactions per month and pays even $0.25 per subsequent transaction, they pay an additional $50-$100 from what initially appeared to be a business-friendly account.
The Technology Factor
Business banking technology is no longer just a “convenience.” It’s necessary for an operation to move smoothly. The quality of apps, the ease of online platforms, and accessibility and integration among other applications create great conveniences – or disrupt efforts on a daily basis.
When it comes to evaluating technology applications, business owners like to see how a bank will work with their accounting software. Manually entering transactions wastes hours every month and makes mistakes highly probable. Comparing options on the best banks for business accounts, helps identify which banks allow seamless connectivity with popular platforms like QuickBooks or Xero.
More than this, the mobile application experience matters – and more than people realize. A check deposit made electronically instead of at the bank saves time and effort in the business day. As does approving payment requests or checking balances on the go. Money-is-time saved. Frustrating bank apps increase friction and friction no one needs in their lives.
Payment processing speed is another technology factor that goes unnoticed. How quickly will a payment be available once it’s made? Can a wire transfer arrive the same day? Some banks wait days; others provide same-day access from checking – even for direct deposits! Assessing this speed of accountability matters.
Customer Service (If It Exists)
No one wants to think about customer service until they need to – but at the same time, if something occurs as it relates to your business bank – and you need immediate support – a frozen account or questionable wire transfer isn’t ideal for logistics disruption.
With this in mind, banks are not known for high-quality customer service standards across the board. Some train their dedicated business banking members to understand business concerns; others route clients through the same customer service number as personal clients who might not even know how to help those who have business accounts.
Additionally, response times matter. Are customer service reps available during critical hours? Are they available on weekends? Do they offer quick chat responses or only operate through phones with limited availability? Many modern online banks provide 24-7 chat support; traditional banks require you to wait on hold while you argue with someone about what your urgent transaction dilemma really means.
Credit or Lending Connection
Even if business owners don’t think they will need a business loan in the future, there connection to one bank for lending can make all the difference down the line. Banks know who you are. If you’ve established a relationship with your business banking provider during years of keeping deposits with them, coupled with otherwise healthy balances, it makes application processes simpler and less stressful.
This has diminished value in recent years; most people acquire lending from other sources rather than their business banking source due to dedicated online lenders through companies like PayPal or vendors who only deal with equipment financing. But when it’s convenient to work at one bank for both options, it makes everything easier.
If a bank also provided business credit cards, lines of credit and term loans, this would make sense as you’ve made your bed and need consistency as new applications tend to create stress and time management issues elsewhere.
Access to Branches (Or None At All)
With some businesses that rarely ever deal with cash payments – you can certainly operate with an online-only bank. For other businesses that require daily cash deposits – or many deposits – it only makes sense to establish access to brick-and-mortar locations.
But in all honesty – the more time spent working digitally or through online-only banks – the better. They often provide better fee schedules and enhanced interest rates because they don’t have outdated branch overhead costs.
On that note, businesses sometimes need access to cash – for weekend sales of $5,000 – that an online bank cannot accommodate unless partnered through Seventh-Eleven or other third-parties for questionable transactions. If they do allow access it’s often marginal at best.
Branch access matters for those who appreciate face-to-face relationships – a stellar banker in town who’s accessible – but many operations never need such access and would rather keep everything online.
Account Features That Scale
A good owner thinks ahead. The account that works best for your start-up may not scale well months down the line as more employees are added or new locations open up. Eventually business checking becomes less than adequate for small operations turning into larger enterprises.
Be sure to find accounts that facilitate scaling opportunities without moving banks completely! Can accounts be opened easily via employee cards or sub-accounts? Are their supported permissions and expectations to accommodate multiple users?
Tiered business accounts offer easy access to upgrade needs when life gets complicated – and make it easier without switching financial institutions completely.
International Features
Even if you’re a company that you don’t perceive has anything international about it…you never know – sending money to freelancers abroad, taking international payments or inventory from contractors overseas happens more often than you’d think.
Foreign transaction fees; domestic wire transfer fees; currency exchange percentages – these things vary from institution to institution. Some charge flat costs plus percentages of currency exchanges which can be 3% + easily; others charge reasonable fees – especially for those who regularly pay international fees. Multi-currency accounts are most helpful as well; if your clients regularly deal in other currencies for payments or invoicing, holding funds in multiple accounts saves on conversion fees.
Keep in mind, there is no best bank – there is only the best fit depending upon how your business operates realistically day-in-and-day-out. A construction company with lots of cash deposits has different needs than a consulting firm who rarely touches cash at all; an e-commerce company that requires rapid growth needs differ from stable local service companies who thrive on word-of-mouth.
Banks successful in the long run are those who fit both anticipated needs – not just present ones! Taking time to effectively assess what’s best in your given situation prevents having to waste time shifting banks down the line – something that’s always possible but nobody wants to go through if they don’t have to!
