It’s not hard to give your bank the boot!
ARE your banking arrangements fairly priced? Do you ever look to see if there’s a better deal?
Searching online or checking in bank branches, you might find a lower priced tariff. Everyone and every business should periodically check the market. You do so for vehicle or home insurance, so why not with
your business bank account? Firstly, understand what you want from a bank and the standards you want applied to how it operates. You may want an ethical bank with strong investment policies that observe
social responsibility or human rights, or a bank adhering to Islamic banking principles.
Also consider things you think important such as bank services and their cost; how charges are applied to facilities; any additional charges; number of branches near where you might need them; whether the bank has a small business section; and any incentives such as free banking to help you decide tomove. With all of this inmind, you can start your search. Helpfully, the Adam Bernstein on banking - Part 1 British Bankers Association (BBA) has an online account finder. It’s simple to follow as it uses tick boxes to identify the nature of the enquiry, type of business you are and facilities you are looking for, such as a branch account or
overdraft.
Next you’ll see a table noting banks thatmatch your search. A cursory look should show a wide range in pricing. For example, of the four main banks, a cheque written will cost you asmuch as 84p (NatWest Business Plus) or nothing (HSBC Business Direct Tariff), assuming you issue less than 20 cheques a
month – £1 per cheque otherwise.
Cheques banked can cost as much as 60p per item (Northern Bank) and or banked free with HSBC (Business Direct). Cash is something that banks want to minimise; it’s obviously a huge cost to process.
There’s a range of charges levied for handling cash. The big four charge from 53p per £100 (HSBC Small
Business) to £2 per £100 banked (HSBC Business Direct).
But there are banks, perhaps names you’ve not heard of, that offer deals worth looking at. For example, Bank of China (UK), with its Private/Public Account charges only 50p per cheque written, 25p per cheque credited,
0.2% for cash banked and nothing for cash taken out, direct debits and standing orders. There’s a charge of £15 per month. Even better, you need only £50 to open an account. Butterfield Private Bank requires £10,000 to open a private bank account, but then charge 50p per cheque in or out, with the first 20 items free, with
no other charges for electronic transactions. They don’t handle cash deposits or withdrawals. I that’s not important, you can open an account and receive 0.1% gross interest and benefit from no monthly charges,
assuming you keep £50,000 on deposit. And at the other end of the alphabet,White away Laid law Bank has a Business Current Account charging £50 a quarter and then 22p per £100 per credit / debit irrespective of cash, cheque or electronic.
One other place to look is the Federation of Small Businesses. They have a tie up with the Cooperative Bank where members can receive free banking. ‘Free’ has a definition though: as many cheques in or out but a deposit of up to £4,000 in cash per month.
There’s a fee free overdraft facility (you pay no arrangement fees), free change facility and receive interest on credit balances from 0.12 to 0.28% gross depending on the balance.
Ethical banks aren’t listed on comparison websites. They need to be hunted out. Google ‘ethical banks’ and various options appear including a link to a list on Wikipedia.
Twelve banks are listed, including Co-operative Bank and Triodos Bank in the UK, as well as banks following Islamic principles, including the Islamic Bank of Britain and LloydsTSB.
CFJ Adam Bernstein is a freelance business journalist Next month: Business deposit accounts and credit cards.
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