A credit union can be a great for a specific type of business. "A credit union has different regulations as far as what it must abide by for giving a small business loans," Rose says. "But if you do qualify, a credit union can be more competitive with its rates."
As you move closer to selecting a bank, pay close attention to the fees. The fee structure for business checking can be significantly different – and much higher – than those assessed by a bank on a personal checking account. Some banks will also charge small businesses for online banking services, even though they do not charge individuals.
Remember, as a potential customer, you have the right to ask for exactly what you need. If that's free online banking, make that clear to the bank manager when you speak with him or her. Or, if you're willing to pay for certain services, but need a representative to be available on a monthly basis to counsel you, let a potential bank know that upfront.
Dig Deeper: Scoping Out Start-up Banks
Switching Banks: Meeting with Potential Bankers
Before setting up meetings with potential bankers, review the bank's written literature, and create a list of questions. Seiwert, who spent 30 years as a banker, recommends asking some or all of the following:
• Do you have small business banking department?
• Are there any industries in which you specialize?
• Are there any industries that you avoid?
• What size company do you most often finance and serve?
• Will you assign an account or branch manager to work with my business?
• Do you have a wealth management or private banking group?
• Do you participate in the SBA loan program?
• Will I be able to export my bank account information directly into my accounting software?
• Does your bank provide account reconciliation services?
• Does your bank offer payroll services?
Dig Deeper: 9 Topics To Cover With Your Small Business Lender
Switching Banks: The Smooth Transition
Congratulations if you've found a new banker. Now, how can you make the transition as seamless as possible?
First, see if your new bank offers advice on the matter – or what some banks call a "switch kit." Wells Fargo, for example, offers one tailored just to small businesses. It recommends that after opening a new account, a small business owner should transfer any automatic transactions to the new bank. Doing so entails notifying service providers and vendors who work with your business.
If you're going with a larger lender, ask foran Account Transfer Letter, or a similar form, that you can send to companies with whom you do business. Send it to any vendor or customers with whom you exchange automatic payments from your business accounts or with whom you do any merchant card transactions.
Next, contact your payroll service provider. You will want to make sure the company has adequate notice so your employees don't experience any delays or unexpected changes in their paychecks. Communicate well with your payroll department or provider about any changes to schedule, and be sure to notify employees of any systematic changes to the way they are paid.
It's not usually necessary to notify every business you work with of the switch, some mid-sized companies might choose to mention a change in banks in the company newsletter or in a periodic e-mail. If you are smaller, mention the change to only your closest business parties. But do prepare an explanation—should a supplier raise the topic, you will want your employees to memorize and repeat a simple party line.
Speaking of notification, one of the toughest parts of this process can be letting your old banker know you're leaving, particularly if your business is based in a smaller community. Don't burn bridges. "If you have a relationship with your bank or banker, I would sit down with the manager and discuss why you are leaving," Seiwert says. "You owe them the courtesy, and its a chance to thank them for their services."
Stop using your old account well before closing it. Wells Fargo recommends that businesses switching accounts "allow time for outstanding checks, debit card purchases and automatic payments to clear," which can take about 10 business days
Once you're certain that your accounts payable is caught up, and your accounts receivable have stopped depositing in your old bank, you'll need to formally notify your old bank you are closing your account. Make sure to take the time to review how your account balance will be refunded to you, what will be done with any stray deposits or withdrawal requests that come into the bank, and any other action that will be necessary on your part going forward.
Dig Deeper: How to Choose an Accountant for Your Business
Switching Banks: A Final Thought
If you like your bank but require a few additional services, you may consider maintaining accounts at different banks. Of course, doing so will require more intense internal accounting systems. If your business is growing more complex in terms of its banking relationship, you will definitely want a good team in place to help you keep track of your money. Your team should include, at a minimum, an accounts payable and accounts receivable professional, a bookkeeper, and a controller or a CFO.
