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What You Should Consider Before Switching Banks

By: Outright

 

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More often than not, we make the decision to change banks in a hurry: either we’re in the process of setting up a whole new endeavor and we need an account right away or something about our old account has gone horribly wrong that forces us to switch banks immediately. But given that the process of setting up a whole new bank account can be a lot of effort, it’s worth taking a moment before actually setting up a new account.

 
Banking relationships can have a lot of impact on your company’s finances for the long-term: not only can a small problem with your bank virtually stop your business in its tracks, but if you already have an account with a bank, they’re going to be more open to providing your business with loans. You need financial relationships that will help your business grow, not hold your company back.
 
Boil Down the Real Issue
 
Even if you are starting an entirely new business venture, you’re likely less-than-pleased with your current bank if you’re looking at business accounts elsewhere. You may only have a personal account at a given institution, but if you liked that bank, you’d probably stick with them. That’s fine, by the way—there’s nothing that says that all your accounts have to be at the same bank or that you need to stick around if there’s anything about the company you’re banking with that you don’t like.
 
But you do need to be able to identify the issues at hand. What don’t you like about where you have your bank accounts now or have had them in the past?
 
Different businesses have different banking needs. Sometimes we can’t recognize all of our needs until something goes horribly wrong, however. At the very least, you may not value great customer service until you’ve been through the wringer with automated telephone lines and argumentative customer representatives. As painful as it may be to relive the memories, go through your different encounters with your current bank—what they’ve been able to do for you, what they haven’t been able to manage, and the mistakes they may have made along the way—and actually consider where they are failing to meet your needs. Only then will you be able to decide the criteria you’re going to use to pick your next bank.
 
Take Account of What a Change Entails
 
You may notice, in the process of taking stock of your current bank, that not all of the problems you’ve faced are insurmountable. Especially when you consider what it takes to move banks, you may reconsider the change. If a particular incident pushed you to move, for instance, you may see a way to resolve that problem.
 
After all, when you switch banks, you do have to go through more steps than just finding that new bank and signing some paperwork. You have to:
 
  • Get new checks printed
  • Get new debit cards (both for you and for anyone else who has access to the accounts)
  • Move over all automatic payments
  • Change over any inbound transfers or payments
  • Create a new process for depositing income
  • Connect your new accounts to your bookkeeping software
 
There’s always some other detail, too; no bank move goes entirely smoothly. None of this is to say that you should never leave your current bank, but you should be sure that a move is worth it. The devil you know may be better than the devil you don’t know.
 
Make yourself a list of every way in which you interact with your business banking account before you start hunting for a new account. That way, when you’re ready to finalize your choice of a new bank account, you can run down the list and transition smoothly—in some cases, you may find your new bank will be able to help with certain aspects of the move.
 
Get a Referral for a New Bank
 
When you’re ready to find that elusive excellent bank account, you will probably find that just about every bank you may consider should have good information about their business accounts available online. You can peruse your options at your convenience and just go into the bank of your choice when you’re ready to open an account. However, you should focus on locating your new bank through a very specific route: If you’re tapped into the local business community, you already have a great resource available to help you consider new banking options. In fact, I found my current business account through a fellow entrepreneur—since it’s at a credit union I wasn’t familiar with at the time, I might never have found this great business account without getting some local advice.
 
Especially if you operate out of an area with a wide variety banking options, other business owners are going to be your best bet for really learning how a given bank does for its clients. You may also find such an approach is particularly helpful for finding out about less obvious banking solutions, like local credit unions you may be eligible to join. Try to get information from other business owners who face similar problems to your own: if they have similar cash flows, money transfer challenges, and other banking needs, they’re more likely to have a good recommendation for you.
 
Don’t be entirely surprised to hear, “If you find a good bank, though, let me know—I don’t really like mine.” Finding a bank you love can be a tough proposition, because few banks make every bit of your business banking experience a joy. It’s common to only find a bank that works for now than to find an organization that you want to work with forever. And if you do find a business bank you want to stay with for the rest of your life, please let me know. But your peers will know more about the relative merits of banks in your area than anyone else.
 
This article was originally published by Outright.com
Published: April 8, 2014
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