Reviewing your business bank account

When was the last time you changed your business bank account, asks Hilary Hall CEO of the National Hairdressers Federation Nearly three quarters of small businesses never change their bank account.  Yet UK businesses spend more than £2.3bn every year on banking charges, according to business financial services company Cashflows UK. Being prepared to switch can benefit your business, so while you wouldn’t want to change your bank every year, it is worth reviewing every now and then. Here’s five ways to get the most out of your account:

• Make sure you understand the charges and how much you pay, especially those associated with the transactions you carry out most frequently;
• Plan ahead to reduce the number of deposits and withdrawals and consider holding onto cash rather than immediately depositing it;
• Automate through electronic payments, as charges for BACS or Faster Payments tend to be lower;
• Stay in credit as much as possible, by drawing up accurate cashflow forecasts;
• Don’t be scared to switch banks, especially if a bank is offering an introductory period of free transactions

If you’re thinking of switching, the British Banking Association recommends you ask the following questions about moving to a new bank:

• What will the interest rate be, and how does this compare with my current bank?
• What will they offer on overdrafts, and how much will I be charged for going overdrawn?
• What loans are on offer and what does the small print say?
• How much will transactions cost?
• How many free transactions will you get each month?
• How good are they at handling complaints?
• How good are their online banking services?
• And how easy do they make it for you to switch?

The main worry about switching is whether it’s got to take lots of time and hassle, with disruption to your business.  Switching accounts is much easier than it used to be and most banks have a dedicated ‘switching’ team.  If you get free transactions for a period after switching, and your business is cash-based with a high number of transactions, you should save money by switching.   Hilary Hall is CEO of the National Hairdressers Federation, the UK’s largest trade association for hairdressing, barbering and beauty salon owners.