The banking industry has been in a state of turmoil in recent years, so it’s more important than ever to make sure that the money generated by your business is deposited in the right account in the first place. Primarily, you need to know that your money is protected by the Financial Services Compensation Scheme, or a similar scheme, which pays compensation if your bank fails. Compensation schemes vary from country to country, so if you’re considering an offshore business bank account, check that your money is, in fact, protected.
Business Bank Accounts
A business bank account is essentially just a payment system that allows you to manage your business cash flow efficiently. In its simplest form, a business bank account may provide just a cheque book and a paying-in book, but the chances are you’ll need direct debit and standing order facilities, as well as the ability to process transactions electronically. Indeed, if your business makes and receives payments almost exclusively by electronic means, look for a business bank account that offers free electronic transactions.
If you’re opening a business bank account for the first time, you may be tempted, as a matter of convenience, to open an account with your existing bank. However, if you approach another bank as a new customer, they may offer you an incentive, such as 12 or 18 months’ free banking, to join them. You obviously need to investigate a little further to find out what charges and fees you can expect when the introductory deal expires, but the important point is don’t be afraid to shop around for the business bank account that best suits your needs.
Business Banking Advice
Depending on the nature of your business, you may need business banking advice from time to time. Ideally, this advice will come from a named personal advisor, or relationship manager, with a direct telephone line. If, for example, you run into financial difficulty and enter into a legally binding agreement, such as an Individual Voluntary Agreement, with you creditors, you need to know exactly where you stand. Unlike bankruptcy proceedings, you can usually stay in business and continue to trade normally when you enter an IVA. However, the right bank and more specifically the right relationship manager, may be able to offer you specific advice about re-establishing trust with your creditors.
Unfortunately, you may only discover the strengths and weaknesses of your relationship manager by trial and error. However, in an ideal world, you’re looking for someone who has intimate knowledge of your type of business and can translate that knowledge into practical, pragmatic strategies that take the business forward. Effective relationship managers are honest, open and responsive. They should acknowledge the limitations, if any, of the bank, but hopefully be able to avoid as much internal bureaucracy, or “red tape”, as possible. Relationship managers who tick all the boxes, no pun intended, are hard to find, so if you find someone who really works for you and your business, stick with them.