Our recent research, conducted amongst 500 senior decision-makers, revealed that over half (51%) of UK SMEs are considering switching their main bank provider in 2023.
We take a look at everything from why you might want to switch providers, to how to do it, and what to look out for.
What is a business bank account?
A business bank account is specifically designed for businesses to manage their finances. These accounts can be used for receiving payments, paying bills, managing your cash flow, making purchases, applying for credit or loans and more. Any legally registered business can apply for a business bank account, including sole traders, partnerships and limited companies.
Both high street banks and challenger banks offer business accounts. All providers’ accounts have different eligibility requirements, perks and conditions, so make sure you do your research before applying. Some business bank accounts are free to open and use, whereas others will charge fees. You may find that the account charges a monthly or annual fee and some accounts charge for specific services. This could be in the form of transaction fees, deposit fees and foreign currency fees.
Why should you consider switching business bank accounts?
There are a variety of reasons why you may decide to switch your business bank account. A new provider may be offering better interest rates than you currently have, or better features, benefits or services. This could be a better online banking system or access to an advisor. If you’ve had a bad experience with your current provider, this alone could be your motivation to switch.
Another reason you may want to switch accounts is to reduce the fees that you pay for the account. Some business bank accounts don’t charge any fees, and others might charge lower fees than competitors. Don’t be put off by fees if the account has certain services and perks that justify the additional costs. Make sure you shop around and be confident that you’re not giving up any important features to avoid paying fees.
How to switch a business bank account
Always research and compare the different bank accounts available and check customer reviews for both the provider and the account. Also, check that your business can meet the eligibility requirements for the new account that you’ve chosen. Some providers require a minimum turnover or for you to have a minimum or maximum number of employees.
Make sure that the new provider has a banking licence, and is protected by FSCS to ensure that your money is secure. Check if the new provider is covered by the Current Account Switch Guarantee. If there’s any problems when you switch, the guarantee can refund any interest paid or lost as well as any charges made on either account.
Open your new business bank account and provide all documentation and identification that may be required. You can then contact your current provider and let them know that you will be switching. You will need to provide them with the details of your new bank account.
Switching bank accounts is the ideal time to review all payments that you currently make from your account. If there’s any that you don’t need, stop them now so that they don’t transfer to your new account.
You can proceed independently if you wish, finalising the switch manually, or you can use the free Current Account Switch Service. The Switch Service is simple and reliable, and means even less work for you. You can choose a date for the switch, but make sure you allow seven working days. Your bank or building society will transfer all of your funds and payments over to the new account. With the Switch Service, redirects are set up to automatically send any payments received by your old account to the new one. This will run for a minimum of 13 months, with longer terms available if you need them.
Before your old account is closed, download any bank statements that you could need in the future as evidence for accounting, tax or mortgage purposes. Finally, don’t forget to update your bank records with any suppliers, customers or other organisations that may have your details.
What business bank account is best?
The best account for your business will entirely depend on your needs. Researching the different offers available and comparing benefits is the best way to work out the right account for you and your business.
Before committing to a new account, check genuine customer reviews so you can be confident that the provider has a good reputation. If you have a business bank account, share your experience with others by leaving a review. Together, we can help people like you make better decisions.