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Getting the right bank account for your business needs could be vital if you are to emerge from the , recession stronger than when you went in. Here are CM's top tips to help you fulfil. your needs.
Words: Brian Collett / Images: Rex Features
Eyes are being cast over bank accounts as never before. With business owners trying to find savings across their operations in order to survive the economic depression, the cost of money is bound to be a big item.
Often, the charges are overlooked because the boss is too busy making a living to study the bank statements.
Some banks take £55 a month just to look after the account. It's not uncommon to find, as in the case of First Trust, a 75p charge per transaction, 70p per £100 on bank notes deposited, and £1.20 per £100 of coins paid in.
Yet a little research would find, for example, that the much-criticised Royal Bank of Scotland charges nothing for cash and cheques deposited, automatic debits, and automatic and non-automatic credits. Nor is there a standing charge. The charges are 53p for every nonautomatic debit and 59p for every £100 withdrawn.
As part of the Royal Bank of Scotland, NatWest operates business accounts in much the same way.
A cash-centred business can pay hundreds of pounds a month just for the convenience of having a bank account and may well feel a change is needed.
The Royal Bank of Scotland group may look good for this purpose, and so may the Co-operative Bank. Its Clarity account allows £4,000 in cash to be deposited free every month, then charges 75p per extra £1,000. There is no charge for automatic and non-automatic debits, non-automatic credits and cash withdrawals.There is, however, a monthly £15 standing charge.
Paying for the privilege
Of the mainstream banks, Barclays is among those that give two years' free banking on accounts in credit.
Business owners used to popping into their local branch, but who have to pay for the privilege, might consider ditching this ingrained habit for a less personal method. Fee-free intemet and telephone banking is given by Alliance & Leicester, provided that £1,000 is paid in every month, and no more than £3,000 is deposited in cash. If less than £1,000 is paid in monthly, there is a £5 fee, and monthly cash deposits of more than £3,000 cost 50p per £100. All transactions can he done through the Post Office—and remember the Post Office likes cash.
Abbey has a similar account, but allows only 100 cheques issued per month without charging. Abbey emphasises that most large banks will ask for a monthly fee, and charge for every transaction.
In your search for a suitable bank and account, the non-household names should never be rejected. The Moneyfacts group, which produces data for the business and personal customer, lists the Whiteaway Laidlaw Bank among the best buys.This bank, owned by the Manchester Building Society, offers banking without a standing charge, provided a £5,000 balance is kept, and cash withdrawals are fee-free. A smaller balance attracts a £17.50 monthly charge, and more than 100 transactions a month cost £17.50. Automatic and non-automatic credits and debits and cheques are 50p apiece.
John Grange, an adviser to one of the Business Links (the government-funded but independent organisations that offer free business information), reminds us there is no easy way to obtain a business account with good terms. He says: "Just shop around yourself. Don't just delegate it to your accountant because you need to build a relationship with the bank."
The other big issue for businesses today is funding for development. Credit is still available to businesses intent on growing — that's the good news.The ffipside is not necessarily had news, but today, lenders are doing more homework to be sure they lend wisely.
The finance-hungry businesses themselves must, therefore, be more precise and thorough in their planning to persuade their lenders.That's the secret.
Lenders are out of touch
A poll by the British Chambers of Commerce suggests lenders are out of touch. Only 45% of the small enterprises polled thought their hank understood their needs.
Other research, from the Federation of Small Businesses, showed about a third of those interviewed found their bank less helpful than before the crisis.
In fact, the federation feels the banks are generally not assisting the businesses that need support and regrets thc passing of the local bank manager. The sharp end is nov, the relationship manager.The cynical-sounding comment from Janardan Sofat, chief operating officer of the London independent financial adviser Addidi, is that he has never met a good relationship managed Oddly enough, in this money-conscious age. there is plenty of free advice, says Grange, the Business Link adviser. He recommends cash-seekers consult local chambers of commerce because they have networking potential and will usually wheel out somebody who can recommend a bank from personal experience. Such advice, based on local knowledge and often dispensed over a friendly drink, comes without a fee, like any help from a Business Link.
Other ports of call can be an independent financial adviser or a broker, says Lee Tillcock, who edits Business Monevfacts magazine. But the best advice may well come from your own company accountant, believes Simon Webster. managing director of Facts ez Figures Financial Planners, an independent adviser in Ashford, Kent. "They would have more knowledge of banks. You may find more contacts that way: argues Webster.
Demand to see an adviser
Tillcock believes a business seeking funds or good terms should start with its existing provider, but should always approach more than one bank. The applicant should "almost demand" to see a small business adviser.
You must talk to somebody who can make a decision," says Tillcock,"and present evidence of a good plan, a clean record and a passion for a project to succeed."
Grange recommends that an enterprise, having gathered the available free advice, calls in all debts before walking into the bank with a request. In this way, the amount of the required loan may be reduced. Grange is upbeat despite the credit crunch — one of his clients has just obtained £100,000 to consolidate other loans. See what you can do to meet the bank's requirements. But if you are refused, ask the bank to tell you exactly why."