How to find the right business bank account

Business banking can be costly, yet despite the introduction in September 2013 of seven-day switching for small business current accounts, very few firms actually change banks.

Small businesses with an annual turnover and/or balance sheet that doesn’t exceed 2 million euros (or sterling equivalent) and with less than ten employees can use the seven-day switching service, as can personal current account holders.

The latest available figures from the Payments Council, the body in charge of the scheme, show that business switches made up just 2.1% of all current account switches in November 2014 up from the 0.4% recorded in September 2013. It’s easy to see that more firms could be looking for a better banking deal.

Business current account features to consider

  • Fee-free introductory banking such as 18 months with Lloyds Bank for start-ups or six months for switchers. Bear in mind any charges that come into play after this period.
  • Flexibility – consider a bank’s high-street presence and online and telephone banking facilities. Weigh up which is most important to you.
  • Low charges – consider the cost of paying in cash or cheques, money transfers, withdrawing cash, account management fees and transaction fees.
  • Overdrafts are also an area in terms of charges that needs to be considered.
  • Relationship – some banks give you a dedicated person to manage the account day-to-day and give guidance. They can also review charges if a customer is thinking of moving.
  • Perks – some banks will also give businesses (usually start-ups) payroll software. Bank of Scotland offers a free 90-day trial of Sage start-up accounting software.

‘Shop around’

Charlotte Nelson, spokesperson at finance data provider Moneyfacts, says: “When looking for a business current account it is important to shop around, so customers would be wise to consider all aspects of the account to ensure which one best suits their needs.

“Selecting a business current account is more than just choosing the best introductory deal or interest rate on offer, the relationship that you will have with your bank is vital.

“Some providers may offer you a dedicated small business manager and by using this service the bank will better understand your business.”

A lot of banks will offer new business current account customers free banking for a set period. This could significantly reduce your costs if you are a new start-up.

Business current account deals

“Norwich & Peterborough’s Gold account is great due to its low charging structure for over-the-counter deposits.

“However, this is not as widely reached to businesses when compared with high street banks such as Barclays, NatWest, Santander, Lloyds and HSBC.

“Out of those providers Lloyds Bank won best business bank in the Business Moneyfacts 2014 awards, with Barclays highly commended and Santander commended.

“Some of these banks will offer much lower charging structures depending on how the business operates. For example, Barclays and HSBC have accounts that encourage online banking.”

Business account best buys

Best Buys Business Current Accounts

Where to shop around

Moneyfacts compiles business current account best buys. There is also the Business Banking Insight (BBI) website, which is like Trip Advisor for banks.

Commissioned by Chancellor George Osborne and launched in May 2014, BBI was designed to allow businesses to make an informed choice about the banks they use by reading other businesses’ scores and comments.

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