5 Considerations for Business Banking: What Questions Should Businesses Ask?

5 Considerations for Business Banking: What Questions Should Businesses Ask?

With all of the recent news around bank failures, uncertainty about where to keep a company’s financial resources is heightened, particularly for small business owners and nonprofit organizations. While there have been weaknesses exposed in the global banking system with the failure of many regional U.S. banks and Credit Suisse, there 5 considerations that we recommend when selecting a bank for your company – of any size.

  1. Standard Services & Fees
  2. Interest Rates (for lending and saving) 
  3. Accessibility
  4. Options for Additional Capital 
  5. Insurance

Standard Services (customer service, checking, savings, credit card, integrations)

Customer Service – The banking sector offers countless products and services designed for small businesses. While these offerings can be overwhelming, we recommended that entrepreneurs/small business owners prioritize customer service, ensuring that their bank (whether online or in branch) has outstanding customer service and is highly rated in this area. 

A few things to consider are: 

  • How easy is it to report issues? – lost cards, fraud, transaction discrepancies
  • What are the operating hours of customer service? – normal business hours, 24/7, etc.? 
  • What are the wait times to speak with an agent?  
  • What is the bank’s policy for fraudulent transaction remediation? 

Checking & Savings Accounts – We recommend that when narrowing down bank selections, entrpereneurs/small business owners compare and contrast checking, savings, and credit card options, costs, and service ratings to determining the best fit for their business.  

A few questions to ask: 

  • What are the banking and transaction fees? – Banks often charge monthly maintenance, individual transaction, overdraft, and ATM fees. It is important to understand these fees before selecting a bank as they can directly affect the operating costs of a business. 
  • Are there fees for international transactions? 
  • How is the bank’s user experience? 
  • Does the bank have a mobile app? If so, how is the user interface? 
  • What does the online interface look like?  
  • Are the monthly statements user friendly? 
  • How easy is it to deposit checks, accept/send wires, transfer money between accounts? 
  • Does the bank offer competitive rates on savings accounts?  

Credit Card Options – Choosing a bank that offers a credit card option can be beneficial as many banks offer competitive rates, cash back offers, and other rewards for businesses of all sizes. Additionally, applying for a credit card with a company’s operating bank can be a simpler process as the bank already has much of the company’s information on file (credit, banking history, etc.) 

Integrations – To ease some of the administrative burden of money management, it is important to select a bank that integrates well with a company’s accounting, customer relationship management (CRM), merchant, and point of sale systems. Having a bank that integrates with these systems can greatly increase efficiency of financial operations and effectiveness of data, reducing errors, streamlining reporting, and providing access to real-time information.

Interest Rates

While interest rates have the most significant impact on borrowing funds, they can also have an impact on the rates that banks offer on savings accounts. As reported by Forbes in May 2023, interest rate increases by the Federal Reserve could result in high-yield savings accounts reaching a 5% annual percentage yield or more in 2023. With this unique savings opportunity, Businesses can benefit greatly by choosing a bank with savings products that offer competitive returns.

Options for Additional Capital

Loans/Lines of Credit – Managing cash flow is one of the most critical aspects of successful business operations. While a business can be profitable, there may be times in its operating cycle where it could run low on cash. This is where having access to loans or lines of credit can be of great use. When exploring options for banking, businesses might consider choosing a bank that offers competitive rates on lending/borrowing products. Having a loan/line of credit attached to a company’s operating bank account can make transferring funds between accounts more streamlined and effective in emergency cash flow situations.

Insurance

Business owners/entrepreneurs who wish to have their company funds protected against bank default, fraud, or other occurrences might consider selecting a bank that guarantees insurance through the Federal Deposit Insurance Corporation (FDIC). The FDIC provides up to $250k of deposit insurance for eligible bank accounts. Not all banks are insured by the FDIC. Business owners/entrepreneurs should inquire about banking insurance when selecting a bank for their business. As an example, credit unions employ an insurance fund run by the National Credit Union Administration (NCUA). Should a business prefer the services of a credit union, we advise asking questions about the insurance that it offer.

Property of CLE Business Services, LLC, All Rights Reserved, 2023 – Disclaimer

CLE Business Services: http://clebusiness.com

Email us: info@clebusiness.com

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