No matter how big or small your business is, it needs a checking account to
survive. Every owner knows this, making it one of the few easy decisions to make.
But, deciding which account is right for you
and your business is a more difficult endeavor. While many services and features are
offered by every bank across the board, each
individual bank has its own individual intricacies. The key is to wade through all the
bells and whistles to figure out what account
will increase your business’s efficiency and
productivity — without extra or hidden fees.
Luckily, there are several banking options
for today’s business owner, says AnnaMaria
Soliman, AVP, a banking relationship manager with FirstMerit Bank.
Smart Business spoke with Soliman about
business checking accounts, what to look for
in them and why they’re so important.
When is it time for a company to look for a
new business checking account?
Actually there are several reasons for a
company to look for a new checking
account; some are specific to changes in the
company and some are market driven. As a
company grows or enters into new markets,
transaction levels and types may change.
These volume changes may increase the cost
associated with a particular account and the
transaction types may increase the company’s exposure to risk. This is the perfect time
to investigate available alternatives.
A second reason to consider a change is
general changes in accounts offered by local
financial institutions. New products and services are continually being introduced to the
market, and it just makes good business
sense to make sure you are getting the services you need at the most economical cost.
What features should one expect in a business checking account?
Specific features are somewhat dependent
upon how the company receives and manages its cash flow. For example, a company
that receives a large volume of smaller consumer payments has much different needs
than a business with a few clients with high
dollar transactions. However, in general, it is
important to consider five factors.
First, is there a monthly maintenance fee
and what type of compensating balance is
needed to offset that fee? A $15,000 compensating balance requirement will cost you
$300 annually in lost interest income assuming a 2 percent return on your investment.
Second, how many transactions does that
monthly fee or compensating balance buy
you? Is that sufficient to meet the transaction
needs of your business? Third, what is the
cost of making a mistake, what is the fee for
an NSF or overdraft occurrence? Fourth,
what are the costs to access your money?
Are there fees for ATM or PIN transactions?
Fifth, does the bank you are considering have
a full line of products and services to meet
your needs both today and as your business
grows?
It’s the Internet age; can you tell us a bit
about Internet banking?
Internet banking is a powerful tool that
helps owners save time and manage their
businesses. It’s important for owners to realize the benefits of a robust business Internet
banking platform in comparison to a standard personal Internet banking solution.
Make sure you have the ability to assign user rights to trusted employees or advisers at the
account level. It is also important to check
how long transaction history and check and
statement images are available.
Another consideration is the ability to
download transaction activity to your financial software. Online bill pay is also a great
service to save business owners money. Be
sure to ask about fees associated with online
bill pay, though. Also, ask what other Web
tools the bank can provide to help you manage your business.
Debit card access is another feature many
businesses desire. What is involved with it?
It is a relatively simple process to sign up
for a debit card, which will allow you to
access the funds in your business checking
account. Check to make sure your bank
offers zero liability protection against fraudulent use. You should also check to see if you
will earn any rewards for using your debit
card. By using your debit card for purchases,
you may also have the ability to get both summary and cardholder management reporting,
which allows you to track expenses by merchant category (i.e. gas, restaurants, etc.).
Is it difficult to switch checking accounts?
That depends to a large degree on the bank
you are switching to. Look for a bank that
will assist you through the process, one that
has a reputation for a high level of customer
service. While you will rarely change account
relationships, for banks, completing these
changes is a part of daily business. This not
only applies to the mechanics involved, but
also to getting you into the account that’s
right for you, with a full suite of ancillary services to save you time and money.
Is there anything else to consider?
Yes, getting the right account for your business should be your primary concern, but
you may also want to look into a workplace
banking offering for your employees. This is
a nice benefit you can provide your employees at no cost to you.
ANNAMARIA SOLIMAN, AVP, is a banking relationship manager for FirstMerit Bank. Reach her at [email protected]
or (440) 442-9821.
