Strange as it sounds, many business owners spend more time researching their new cell phone than they do their potential banking relationships.
That’s unfortunate, because a good banking situation can be key to the success of your company. If you’re hoping to grow your business significantly over the next few years, you need to be serious about your banking needs.
Here are some tips on choosing a bank to get started.
Get a Banking Referral
To speed up your search for the right bank, you should ideally be able to get recommendations for two or three possible banks from your accountant or financial advisor.
This makes sense for two reasons. First, your accountant should be familiar enough with your business – its operations, its cash flow situation, its probable lending needs, and so forth – to steer you to a bank, and to an individual bank employee, that can meet your needs.
Second, your accountant will be familiar with the recommended bank’s operations, including how monthly and annual statements are presented, funds availability, lending requirements and procedures, and other logistical matters that will help your company run more effectively.
If you are deciding between two or more banks for your company’s needs, ask your accountant for his opinion. You might also ask him to come along to your initial meeting with the banking officer who would be assigned to your account.
Fair warning: There is more copycatting in the banking industry than almost any other. Whether it’s the basic services or more exotic offerings, most full-service banks provide startlingly similar choices.
The products or bank services may have different names at different institutions, but they will provide you roughly the same amount of utility. Even new or cutting-edge bank products tend to be mimicked by competitors within a year.
In any case, there are certain “must-have” services your bank must provide to your company from day one, and other “second-level” services that you may grow in to, or might like later on.
Bank Features: The Must-Haves
· Corporate checking accounts
· Online account information
· Business credit card accounts
· Wire and electronic payment services
Bank Features: The Second-Level
· Credit lines
· Conventional or term loans
· Direct deposit for employee payroll
· Merchant services / credit card processing
· SBA Loans
Tip: If you think you may eventually apply for an SBA (Small Business Administration) loan, make sure in advance that your bank participates in the program. SBA loans are backed by the federal government, and totaled just over $32 billion in 2012.
Some banks also offer services that don’t fall under conventional banking, like certain investment and insurance products, retirement plan accounts, and travel services.
Very little of this is free, of course. While some accounts might have fees waived if a certain balance is maintained, most bank services have some sort of cost attached. Be sure you know exactly what you’re paying for each service.
And make sure you’re only buying – and paying for – what you really need! Many banks bundle their services, so if you’re not careful, you could end up being charged for things you’ll never use.
Making Your Banking Choice
When choosing a bank, it’s important to think long-term. Discuss with your potential banker not just what you’ll need now, but what services or assistance you will need two years or more from now.
Show her your business plan and cash flow projections. (Your accountant can help compile a package that presents your company favorably.) Make sure the banker understands your company and your industry.
Ask lots of questions. How much experience does your potential bank have with companies in your industry? What would your company have to do to become eligible for a loan? Are loans approved locally, or at a home office?
Finally, decide what’s most important to you. Is it close proximity? Is it good chemistry with your assigned bank officer? A good lending track record with small companies? Make sure you work with your accountant to establish your priorities, so you’ll know what you need before you sign on.
Image courtesy Dollar Bank
Are cash flow problems impacting your company’s ability to grow? Stop waiting 45 or 60 days for payments! MP Star Financial can help you get a better handle on your company’s cash flow management. Call for more information. (800) 833-3765, extension 150.