Switching bank accounts is easier than ever, but when it comes to your business or client’s account is it really worth the upheaval?
According to the British Bankers’ Association, at the end of 2015 small and medium-sized businesses held £95.3bn in business current accounts. Up to 96% of firms currently use the big five banks, but could be offered lower interest rates if they were to switch to alternative accounts.
Switching accounts can deliver significantly more in interest each year, which could pay towards a new member of staff or investment in IT infrastructure.
While many of us are being challenged to move bank accounts, the government seems to be taking the lead.
It confirmed at the time: “Most taxpayers paying their bills electronically will be unaffected and do not need to do anything.
“Customers who currently pay using Bank Giro or Transcash payslips should consider alternative ways to pay such as electronic payments.
“From February 2016 customers making payments from overseas will need to use a new IBAN number when making payments through their bank.
This will be published on GOV.UK prior to February 2016. Any customer group likely to be affected by the changes will be contacted directly.”
Citi and RBS previously provided banking services to the government, and after the contract came to an end it re-tendered in August 2014.
This is not the first time the Revenue has made the switch. Back in 2010 is changed its head office collection account from Bank of England to NatWest.
The issue of switching bank accounts is often discussed among AccountingWEB members, even going back several years before switching became commonplace.
Back in 2013 AccountingWEB member Mano Manoharan asked the community for feedback on opening a business account with Santander.
Sarah said they went to the bank because they offered free business banking at the time.
“Online banking goes down at times which can be frustrating,” but added she “Never felt a need to leave them though.”
Pozzer6 had also switched Barclays to Santander and reported a good experience: “I recall the online system going down maybe once or twice but then every system goes down occasionally!” they said.
Many others seemed satisfied with switching but Glennzy commented how Santander had been “aggressively” buying up business and doing good deals to get clients, but added that the day-to-day stuff was not ideal.
“They have to use the Post Office network for banking, any cheques you bank are posted by the Post Office to a processing centre at Bootle (many go missing and sometimes don’t show up for a month). This is also not ideal if you require change for till floats/cash businesses as the Post Office struggle to cope with your requirements unless they have a day’s notice,” Glennzy said.
Back in 2012 in a separate discussion thread, Jack Spratt said they had experience of Barclays and RBS, but were now looking for recommendations from other members.
Jennifer Adams said it was important to be able to walk into your bank and shout.
“Even though Tim was a good business adviser we therefore went to HSBC - for one reason and one reason only - there was a business manager always onsite and hence you could go into the branch and shout at them should anything go wrong and it was dealt with immediately,” she said.
Adams added: “Each bank is attractive to different types of company and business and they will attract you with free charges at the beginning but in the end you have to look for whether they will suit your business and your clients business.”
Have you switched or are you considering switching business bank accounts? Why did you switch and what was the experience like?
About Robert Lovell
Business and finance journalist