If you’re looking to start your own business and find the perfect bank, you might think that this process seems fairly straightforward. Compare a few options, review the fees, check the interest rates and move forward. Six months down the line you’re facing deposit holds that threaten your cash flow or no one on the other end of the phone when your computer crashes and your banking app is going crazy, or you’ve realized that the account option you selected essentially does not support half of what you actually need.
Interest rates and monthly fees matter, yes, but they are not usually the cause for concern that drives people to switch business banks. Instead, the issues tend to be much more practical than that.
No One Tells You About Deposits
If you’re a new business owner, you might be most concerned about monthly fees or transaction costs. But when you get a big client who sends you a check for $15,000 and your business bank is going to place a seven-day hold on that check, and you need to pay payroll and some vendors, you’re going to wish you’d asked a little more about deposit policies.
Banks have different rules, and they vary immensely. Some will hold larger deposits for a week or longer (especially if your account is new), and some are more flexible once they see your history with a certain amount of transactions. Community banks tend to give you the benefit of the doubt more often since they know who you are (but then again, they might not have the digital infrastructure needed), while larger banks process more quickly but often see you as merely an account number.
Mobile deposits are also a real pain if your new business deals with mobile deposits. Some banks limit mobile checks to $5,000 or $10,000 per day, meaning if you run a business where people write larger checks to pay for services rendered, it can be incredibly frustrating.
Payment Processing Integration (Or Lack Thereof)
When it comes to payment processing, this is how many people learn that their business bank was perhaps not the best option. Whether you’re trying to integrate with online platforms for easy invoicing or using accounting software for transactions, sometimes it works and other times it’s easier if you try to do it on your own.
Not every bank meshes well with every software. As such, many business owners end up manual reconciling because their bank does not sync with their accounting needs. That means hours looking through transactions, reviewing for mistakes and basically doing work that should otherwise be automated. This should be highly considered when comparing different features because if you like certain platforms for invoicing, inventory or bookkeeping, it’s important to know how banks will allow for integrations. When you’re evaluating the best business bank account for your needs, integration capabilities should be a major factor in your decision.
Similarly, the payment processing side matters too. If you take credit cards, some banks offer merchant services within their business banking option. Other banks will make you go through a third party. Neither is better than another, but it’s paramount to know how payments are coming in before committing since this will also paint a picture for what payments will cost and how much time it’ll take to get them through.
When Customer Service Actually Matters
Everyone says customer service is important, but unless you need it it’s hard to gauge what that actually means. The truth is: something will go wrong. A transaction will appear as suspicious and lock your account; you’ll need to dispute a charge; you’ll have questions about international wires that won’t go through; all of these matter in how a bank will address your concerns.
Some banks assign a dedicated representative for business banking. You have a number, you call it and someone knows who you are. Other banks channel you through customer service where it takes 20 minutes before you’ve explained the structure of your LLC to someone reading from a script asking how they can help you. When you’re facing an urgent error, this matters more than 0.1% of interest.
The hours also matter. If your bank serves its business support team through typical banking hours and you call frustrated at 6 PM on a Friday, you’re out of luck until Monday. Some online banks provide 24/7 support, but this isn’t always through speaking with a live representative; it could be chat only which doesn’t help much when you’re overwhelmed with questions about your newly established business account.
Account Features Not To Be Overlooked
Transaction limits can pop up on people all the time. Most basic (free) business checking accounts offer 100-200 transactions per month. If you’re a retail business or have multiple vendors, you can reach that maximum fairly quickly, and it becomes expensive fast when you’re paying additional fees per transaction.
Additionally, multi-user access is another. If you plan to utilize a bookkeeper or have a business partner or office manager who needs access to see the account or cut checks, some banks allow you to set permissions while others make it less convenient, and potentially detrimental, to share login information via a secondary user.
Savings options also make it worthwhile to ask specific questions over time. Most business checking accounts pay little interest on savings, which is fine, but some banks allow you to sweep excess funds into a high-yield saving option which makes sense if you know that you’ll be parking money for a long period of time.
Digital Banking Experience
Banks offer apps and online banking because they’re pretty useless otherwise; most owners do everything virtually nowadays so the difference between a good and mediocre banking experience becomes increasingly clear soon after opening an account.
Can you deposit checks remotely? Can you categorize transactions? Can you set scheduled payments? Can you export information for your accountant? Can you view your balance without logging in repeatedly? These might feel like minutiae but when you’re checking day in and day out multiple times per day, small inconveniences become large frustrations.
Furthermore, some banks make their digital experience obviously pleasant while others appear they haven’t fixed their user interface since 2010. These systems will be used frequently so it’s best to test them out before getting an account; most banks will let potential customers look at the digital on-boarding demo or screenshots before banking with them.
The Relationship Banking Element
This tends to put people on either side of the fence: how much of a relationship do you want with your bank?
Relationship banking suggests smaller community/regional banks where people know who you are and down the road there could be negotiations in services such as loans or lines of credit outside of just fee accountability. The negative? They often come with higher fees and fewer technological advancements.
Choosing a national bigger bank, or an online-only account, most likely means you’ll never speak with the same banker twice but will enjoy nicer technology, lower fees most likely and immediate accessibility. Neither route is incorrect; however, knowing which one best suits your lifestyle can cut back on complications down the line.
What Do People Wish They Knew?
If you chat with people who switched banks they’ll tell you similar things, and all relate to realms of which they wish they’d asked or investigated sooner. They wish they’d known why certain deposits held funds longer than expected; they wish they’d done the app testing ahead of time; they wish they’d paid more attention to fee structures outside of comparative charts.
Most importantly, they wish they’d looked more toward the future instead of focusing on the present moment needs only; an account that suffices at $5K monthly could be limiting when the business expands to $50K monthly. Switching banks is possible, but it’s time-consuming (notification to clients/vendors, updating payment systems) and involves tracking two accounts in the interim of switching until transactions finalize.
The good news is that business banking has become competitive; there are far more options today than ever before as banks compete for businesses’ service. As such, it’s good to be picky and locate an account ideal for not just budgetary purposes but how one truly runs their company because the best option isn’t one that has miniscule fees or added interest, it’s one that makes running one’s company as streamlined as possible without complications.
