How to Switch Business Bank Account

Guidelines that'll help you make this transition with ease.

Updated: September 15, 2023

The thought of having to switch your business account can be pretty daunting, but that's understandable given that it's the hub of all your business's finances — from managing your revenue and expenses to seizing new opportunities for growth.

Still, regardless of the reason, it's fairly unlikely that you have the same business current account forever, so throughout this article, we'll be walking you through how you can smoothly switch your business bank account to another without all the unnecessary stress.

So, whether you're a small start-up or more of an established company, we've put together some guidelines that'll help you make this transition with ease.

Assess Your Current Banking Needs

Before you dive straight in and choose the first bank business bank account with good rates, try to take a moment to assess what your current banking needs actually are:

Evaluate Your Goals

Have you thought about what it is you're actually looking for with this new account? Whether it's reduced fees, better interest rates, improved online banking services, or even just a more accessible branch network, you always want to consider how the switch will impact your business in the short and long term.

Account Type

Next, take a look at whether your current account type meets some of your requirements. For example, if you started out as a sole proprietor but now run a limited company, you're most likely going to need a far more sophisticated account structure.

Transaction Volume

Lastly, it's worth analysing some of your transaction history to better understand how frequently you make transactions and what category they typically are. This essentially lets you figure out what some of the more important account features that you actually need are.

Research and Compare Banks

Ok! Now that you've come to terms with your banking needs, you'll need to start searching for a new bank account to switch to:

Bank Options

If you're based in the UK, you've got plenty of solid options at your disposal when switching business bank accounts — whether that's traditional high street banks, challenger banks, or even online-only banks.

Each kind of bank has its own strengths and weaknesses, so base your choice on the requirements that you outlined in the previous section.

Account Features

After this, you'll want to scrutinise the kind of features that these banks can offer you. Try to consider things like their account fees, interest rates, overdraft facilities, if they can provide any additional services (business credit cards, for instance) or general access to financial advisors.

Customer Service

You'd feel pretty perilous if you ran into some issues with your bank account and didn't have sufficient support to help you out, so look into the quality of customer service your potential bank offers. Customer reviews are generally a great way of getting unbiased feedback.

Prepare Your Finances

Make sure you've got your financial house in order before actually making the switch, which all starts by reviewing your current business account.

As mentioned earlier, it's worth examining your transaction history, but this time, it's for making sure all your entries are accurate and up-to-date.

Aside from this, it's imperative that you clear any outstanding balances on your current account before switching, too.

Not only does this prevent any debt from carrying over to your new account (which would obviously be a major hassle), but it also means that you'll be leaving your old bank on good terms, which is naturally pretty beneficial for your business's reputation.

Furthermore, ensure all of your financial records are updated before transferring your credit balance – meaning your business documents, invoices, and even receipts are neatly organised and can be accessed whenever.

Ultimately, that'll help out a lot with streamlining the overall transition process, which makes it far easier to give your new bank the necessary documentation when opening your new account.

Open a New Account

When you're discussing the specific type of business account you require with the bank representative, try to be as transparent as possible regarding things like your banking needs, whether that's your transaction volumes, expected cash flow, or just any special requirements you might have that are unique to your business.

In addition, it's crucial you're talking to them about any of the fees that are associated with the account, from monthly maintenance charges to minimum balance requirements. Having an understanding of some of these fees upfront makes it a lot less daunting when you find out you've been charged later on.

So, once the bank representative has helped you open your new account, they'll then provide you with a set of new account details, including sort codes and account numbers.

Just make sure you've securely stored this information and shared it with your financial team so everyone is on the same page with the new banking arrangements.

We'll come onto this in more detail later, but remember that it's generally advisable to open your new account before you actually close the old one. There are a few reasons for this, but mainly, it's so you can transition your financial operations smoothly without there being any gaps that could possibly disrupt your day-to-day business activities.

Transfer Your Transactions

Naturally, transferring all your payments from your old bank account to the new one is a pretty pivotal step for avoiding any interruptions in your financial activities while making the switch.

Let's break this down in a bit more detail:

Identify All Recurring Transactions

Start things off by taking a look at all the recurring transactions that are associated with your old account – both incoming and outgoing payments. Generally speaking, this includes things like direct debits, standing orders, or any other kinds of scheduled payments. You might want to review your bank statements so you don't miss anything, either.

Notify Payees

After this, you'll want to contact the companies, suppliers, or individuals that were involved in these recurring transactions. Just give them a heads-up that you've switched accounts and give them your new bank account details so you can prevent any payment delays.

Update Payment Methods

Whether it's an e-commerce platform or subscription service, log in to all of your online accounts so you can update your payment methods with your new business account details so that any ongoing business expenses are charged to the proper account.

Close Your Old Account

Finally, you're naturally going to need to close your old business bank account so you can wrap up the whole transition and avoid any potential issues down the line.

Here's a more detailed guide on how you can actually do this:

Contact Your Old Bank

Whether it's through their customer service network or just by visiting their local branch, the first step is to reach out to your old bank and let them know that you intend to close the account.

They'll likely offer you a bunch of additional benefits for staying with them at this point, but you've already committed to the new account, so just inquire about their specific account closure process instead.

Confirm Account Closure Requirements

Then, talk to your old bank so you can get a list of requirements or other documentation that you need to close the account.

This is normally a pretty straightforward process, but it might include things like a signed account closure request, as well as identification and any other remaining checks or debit cards that are associated with the account.

Obtain Confirmation

Lastly, it's worth requesting some form of a written statement from your old bank that confirms that your account with them has been closed. This kind of documentation is crucial to have on hand for your financial records so you can provide proof of closure in case any issues arise in the future.

Related Guides:

How to Switch Business Bank Account: FAQs

What Is the Current Account Switch Guarantee?

What Are Third Party Provider Permissions?

Will My Credit Score Be Affected by Switching Bank Accounts?

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