The thought of having to switch your business bank account can be pretty daunting, and that's understandable given that it's the hub of all your business's finances.
But your business needs will likely evolve over time and that means it can pay to switch to a business bank account that better meets those new requirements.
Throughout this article, I'll be walking you through how you can smoothly switch your business bank account to another without unnecessary stress.
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.
1) Assess Your Current Banking Needs
When looking to switch business bank accounts, you'll need to compare them carefully and think about what you need from your account.
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, think about the type of account you need. For example, if you started out as a sole trader 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 certain transactions. This can be useful when working out what fees you'll need to pay on the account.
2) Research and Compare Banks
Now that you've worked out what you need from your account, it's time to start comparing them.
Bank Options
If you're based in the UK, you've got plenty of 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 type of features that these banks can offer you. Consider factors like 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
It's also important to look at customer service. Can you contact someone by phone or is customer support solely online? Does the bank provide 24/7 support or are they closed at weekends? Be sure to check and also take a look at customer reviews as these are generally a great way of getting unbiased feedback.
3) Prepare Your Finances
Before you get switching, it's worth taking a closer look at your current business finances.
As mentioned earlier, it's worth examining your transaction history, but this time, make sure your entries are accurate and up-to-date. If you are using an overdraft, it's a good idea to pay this off if you can.
In some cases, you might be able to transfer your overdraft across to the new account, but this won't always be possible and it's generally far better to clear your debt if you can.
Also, ensure all of your financial records are updated before transferring your credit balance – this includes business documents, invoices, and even receipts.
Ultimately, this will help streamline the overall transition process, which makes it far easier to give your new bank the necessary documentation when opening your new account.
4) Open a New Account
Once you've found the right account, you're ready to get switching. Just like personal bank accounts, you can often use the Current Account Switch Service to switch business bank accounts.
Using this service will make things a lot easier as your new bank will do the hard work for you, moving everything across from your old account to your new one. This includes direct debits and standing orders and the switch should be completed within 7 working days. Your old account will also be closed on your behalf.
If you don't use the Current Account Switch Service, you can go ahead and open your new account and you'll then need to follow the steps below.
Keep in mind that it's generally advisable to open your new account before you 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.
What's the Process for Switching Business Bank Accounts?
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
A good place to start is by looking 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 types 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 correct account.
Close Your Old Account
Finally, you'll need to close your old business bank account so you don't face any issues later down the line.
Here's a more detailed guide on how you can do this:
Contact Your Old Bank
Whether it's through your bank's customer service team or by visiting your local branch, the first step is to reach out to your old bank and let them know that you intend to close the account.
You'll likely be offered a bunch of additional benefits for staying with the bank 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
Ask your old bank for 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.
