Depending on whether your primary objective is financial support and advice for your fledgling business or bargain basement banking to keep your costs as low as possible, there are some big decisions to make in choosing the most appropriate bank for your needs. And these decisions are not just for those starting up; they can, and should, be regularly reviewed to make sure your banking deal is still the right one for your business.

Depending on whether your primary objective is financial support and advice for your fledgling business or bargain basement banking to keep your costs as low as possible, there are some big decisions to make in choosing the most appropriate bank for your needs. And these decisions are not just for those starting up; they can, and should, be regularly reviewed to make sure your banking deal is still the right one for your business.

Depending on whether your primary objective is financial support and advice for your fledgling business or bargain basement banking to keep your costs as low as possible, there are some big decisions to make in choosing the most appropriate bank for your needs. And these decisions are not just for those starting up; they can, and should, be regularly reviewed to make sure your banking deal is still the right one for your business.

The relationship between the banks and their business customers has undoubtedly changed during recent years, with the former much more keen to play a more hands-on role in the long-term development of their customers. Recognising that no two businesses have the same needs, facilities and charging structures vary considerably, and technology has been at the forefront of these changes.

Just as in the personal banking sector, online banking has had a significant impact on the way in which businesses manage their accounts, but any suggestions that such a ’remote‘ approach to managing finance spells the end for face-to-face interaction would certainly be wide of the mark. Fraser MacKay, head of marketing at Barclays Local Business Banking, says that a combination of both is a common approach today. “I‘ve heard it described as ’clicks-and-mortar‘ and it‘s fair to say that the two aspects do sit very much side-by-side,” he says.

 

Online banking has become a way of life for small firms. The latest figures from the British Bankers‘ Association (BBA) reveals that over 42% of SMEs use online banking. Mike Harding, senior manager of customer recruitment at Lloyds TSB Business, says 40% of the bank‘s business customers have registered for online banking. “In addition, we have around 100,000 customers signed up to receive an SMS text of their balance on either a daily or a weekly basis,” he adds.

Another area that has seen rapid growth is the business credit card. While not yet offered across all banks, more business credit and debit cards are being introduced in response to customer demand. “Cards are being seen as a way of assisting with cashflow and easing the process of accounts reconciliation,” says Barclays‘ MacKay.

Price versus value

A widening range of facilities is perhaps symptomatic of an increasingly competitive market for the small business customer. There are around 40 business accounts on offer from over 30 financial institutions in the UK so competition among the banks is stiff. Full comparative details are available from the ’business account finder‘ section of the British Bankers‘ Association website (www.bba.org.uk) but businesses should be wary of making their banking decisions based solely on the level of the various charges levied.

One of the big differentiating factors for most service providers is price, yet within the banking sector this can be a less significant aspect to decision-making than you might think. “If you‘re getting a good service, have a great relationship with your manager and are getting advice and support that you believe can help your business survive, grow and prosper, then price is almost secondary,” says Barclays‘ MacKay. “Customers are willing to pay to get the level of quality they require.”

Lloyds TSB‘s Harding agrees that while price is undoubtedly an issue for customers, it‘s often not the key one: “The relationship model is important and that is what gives the sense of value rather than just looking at the transactional price in isolation.”

Charges on business accounts are perhaps more varied now than they were a few years ago. “Many banks decided to start offering interest on their current accounts, whereas we went down the route of offering customers free automated transactions because we believe that‘s what they wanted,” explains Barclays‘ MacKay. “We were a lone voice in that respect for a while but now a number of other banks have also moved on to that idea.”

However, new research by Alliance & Leicester Commercial Bank suggests that there could be significant savings on bank charges to be had by shopping around, particularly for business customers with a turnover of less than £1m, who it claims are paying out well over £500m a year on charges that they could avoid. For example, the bank‘s survey found that the average business spends around £425 a year on cash transactions.

“Small businesses are short-changing themselves,” says Steve Jennings, director of business banking at Alliance & Leicester Commercial Bank. “While working hard to make money and grow their companies, they are neglecting to review how their hard-earned cash is treated.” He adds that companies should regularly review their banking arrangements to check whether they could get the same service for less cost.

End of the road

What about when that relationship with your existing bank breaks down? If you‘re not getting the help you need from your bank, it could be time to take a walk. Switching banks is not the onerous task it once was, although businesses of all sizes can understandably be reluctant to embark on what they perceive to be a potentially time-consuming and stressful process. Most banks – keen to expand their small business market share – try to make it as simple as possible to transfer your financial affairs to them and some have departments dedicated to overseeing this process for you.

“Switching is happening but still quite slowly,” says Lloyds TSB‘s Harding. “I‘m consistently surprised that more people don‘t switch. We, as well as a number of other banks, have worked hard to make it much easier for customers to switch banks by taking care of all of their standing orders and their direct debits, together with a compensation package in the event that we miss any of our promised timescales.”

In the context of a burgeoning market, don‘t forget to exercise your right to take your bank to task if you are in any way dissatisfied with the level of service they have provided. The BBA‘s Brian Capon says that you should always raise your concerns with your bank to see if you can get a better deal before making the decision on whether to take your custom elsewhere. “It‘s always worth taking the issue to your existing bank: if you‘re not happy with their charges or any other aspect of the service, tell them,” he says. “It may be possible to get a better banking deal without having to switch your account.”

Figures from the BBA suggest that over the last 12 months, around 547,000 small businesses have established new banking relationships. So it‘s little wonder the banks are continuing to refine their small business banking services in order to stake a claim to a share of this sizeable market. It‘s those companies that are prepared to put up with shoddy levels of service because they think there‘s no other alternative that will really miss out.

The relationship between the banks and their business customers has undoubtedly changed during recent years, with the former much more keen to play a more hands-on role in the long-term development of their customers. Recognising that no two businesses have the same needs, facilities and charging structures vary considerably, and technology has been at the forefront of these changes.

Just as in the personal banking sector, online banking has had a significant impact on the way in which businesses manage their accounts, but any suggestions that such a ’remote‘ approach to managing finance spells the end for face-to-face interaction would certainly be wide of the mark. Fraser MacKay, head of marketing at Barclays Local Business Banking, says that a combination of both is a common approach today. “I‘ve heard it described as ’clicks-and-mortar‘ and it‘s fair to say that the two aspects do sit very much side-by-side,” he says.

Online banking has become a way of life for small firms. The latest figures from the British Bankers‘ Association (BBA) reveals that over 42% of SMEs use online banking. Mike Harding, senior manager of customer recruitment at Lloyds TSB Business, says 40% of the bank‘s business customers have registered for online banking. “In addition, we have around 100,000 customers signed up to receive an SMS text of their balance on either a daily or a weekly basis,” he adds.

Another area that has seen rapid growth is the business credit card. While not yet offered across all banks, more business credit and debit cards are being introduced in response to customer demand. “Cards are being seen as a way of assisting with cashflow and easing the process of accounts reconciliation,” says Barclays‘ MacKay.

Price versus value

A widening range of facilities is perhaps symptomatic of an increasingly competitive market for the small business customer. There are around 40 business accounts on offer from over 30 financial institutions in the UK so competition among the banks is stiff. Full comparative details are available from the ’business account finder‘ section of the British Bankers‘ Association website (www.bba.org.uk) but businesses should be wary of making their banking decisions based solely on the level of the various charges levied.

One of the big differentiating factors for most service providers is price, yet within the banking sector this can be a less significant aspect to decision-making than you might think. “If you‘re getting a good service, have a great relationship with your manager and are getting advice and support that you believe can help your business survive, grow and prosper, then price is almost secondary,” says Barclays‘ MacKay. “Customers are willing to pay to get the level of quality they require.”

Lloyds TSB‘s Harding agrees that while price is undoubtedly an issue for customers, it‘s often not the key one: “The relationship model is important and that is what gives the sense of value rather than just looking at the transactional price in isolation.”

Charges on business accounts are perhaps more varied now than they were a few years ago. “Many banks decided to start offering interest on their current accounts, whereas we went down the route of offering customers free automated transactions because we believe that‘s what they wanted,” explains Barclays‘ MacKay. “We were a lone voice in that respect for a while but now a number of other banks have also moved on to that idea.”

However, new research by Alliance & Leicester Commercial Bank suggests that there could be significant savings on bank charges to be had by shopping around, particularly for business customers with a turnover of less than £1m, who it claims are paying out well over £500m a year on charges that they could avoid. For example, the bank‘s survey found that the average business spends around £425 a year on cash transactions.

“Small businesses are short-changing themselves,” says Steve Jennings, director of business banking at Alliance & Leicester Commercial Bank. “While working hard to make money and grow their companies, they are neglecting to review how their hard-earned cash is treated.” He adds that companies should regularly review their banking arrangements to check whether they could get the same service for less cost.

End of the road

What about when that relationship with your existing bank breaks down? If you‘re not getting the help you need from your bank, it could be time to take a walk. Switching banks is not the onerous task it once was, although businesses of all sizes can understandably be reluctant to embark on what they perceive to be a potentially time-consuming and stressful process. Most banks – keen to expand their small business market share – try to make it as simple as possible to transfer your financial affairs to them and some have departments dedicated to overseeing this process for you.

“Switching is happening but still quite slowly,” says Lloyds TSB‘s Harding. “I‘m consistently surprised that more people don‘t switch. We, as well as a number of other banks, have worked hard to make it much easier for customers to switch banks by taking care of all of their standing orders and their direct debits, together with a compensation package in the event that we miss any of our promised timescales.”

In the context of a burgeoning market, don‘t forget to exercise your right to take your bank to task if you are in any way dissatisfied with the level of service they have provided. The BBA‘s Brian Capon says that you should always raise your concerns with your bank to see if you can get a better deal before making the decision on whether to take your custom elsewhere. “It‘s always worth taking the issue to your existing bank: if you‘re not happy with their charges or any other aspect of the service, tell them,” he says. “It may be possible to get a better banking deal without having to switch your account.”

Figures from the BBA suggest that over the last 12 months, around 547,000 small businesses have established new banking relationships. So it‘s little wonder the banks are continuing to refine their small business banking services in order to stake a claim to a share of this sizeable market. It‘s those companies that are prepared to put up with shoddy levels of service because they think there‘s no other alternative that will really miss out.

The relationship between the banks and their business customers has undoubtedly changed during recent years, with the former much more keen to play a more hands-on role in the long-term development of their customers. Recognising that no two businesses have the same needs, facilities and charging structures vary considerably, and technology has been at the forefront of these changes.

Just as in the personal banking sector, online banking has had a significant impact on the way in which businesses manage their accounts, but any suggestions that such a ’remote‘ approach to managing finance spells the end for face-to-face interaction would certainly be wide of the mark. Fraser MacKay, head of marketing at Barclays Local Business Banking, says that a combination of both is a common approach today. “I‘ve heard it described as ’clicks-and-mortar‘ and it‘s fair to say that the two aspects do sit very much side-by-side,” he says.

Online banking has become a way of life for small firms. The latest figures from the British Bankers‘ Association (BBA) reveals that over 42% of SMEs use online banking. Mike Harding, senior manager of customer recruitment at Lloyds TSB Business, says 40% of the bank‘s business customers have registered for online banking. “In addition, we have around 100,000 customers signed up to receive an SMS text of their balance on either a daily or a weekly basis,” he adds.

Another area that has seen rapid growth is the business credit card. While not yet offered across all banks, more business credit and debit cards are being introduced in response to customer demand. “Cards are being seen as a way of assisting with cashflow and easing the process of accounts reconciliation,” says Barclays‘ MacKay.

Price versus value

A widening range of facilities is perhaps symptomatic of an increasingly competitive market for the small business customer. There are around 40 business accounts on offer from over 30 financial institutions in the UK so competition among the banks is stiff. Full comparative details are available from the ’business account finder‘ section of the British Bankers‘ Association website (www.bba.org.uk) but businesses should be wary of making their banking decisions based solely on the level of the various charges levied.

One of the big differentiating factors for most service providers is price, yet within the banking sector this can be a less significant aspect to decision-making than you might think. “If you‘re getting a good service, have a great relationship with your manager and are getting advice and support that you believe can help your business survive, grow and prosper, then price is almost secondary,” says Barclays‘ MacKay. “Customers are willing to pay to get the level of quality they require.”

Lloyds TSB‘s Harding agrees that while price is undoubtedly an issue for customers, it‘s often not the key one: “The relationship model is important and that is what gives the sense of value rather than just looking at the transactional price in isolation.”

Charges on business accounts are perhaps more varied now than they were a few years ago. “Many banks decided to start offering interest on their current accounts, whereas we went down the route of offering customers free automated transactions because we believe that‘s what they wanted,” explains Barclays‘ MacKay. “We were a lone voice in that respect for a while but now a number of other banks have also moved on to that idea.”

However, new research by Alliance & Leicester Commercial Bank suggests that there could be significant savings on bank charges to be had by shopping around, particularly for business customers with a turnover of less than £1m, who it claims are paying out well over £500m a year on charges that they could avoid. For example, the bank‘s survey found that the average business spends around £425 a year on cash transactions.

“Small businesses are short-changing themselves,” says Steve Jennings, director of business banking at Alliance & Leicester Commercial Bank. “While working hard to make money and grow their companies, they are neglecting to review how their hard-earned cash is treated.” He adds that companies should regularly review their banking arrangements to check whether they could get the same service for less cost.

End of the road

What about when that relationship with your existing bank breaks down? If you‘re not getting the help you need from your bank, it could be time to take a walk. Switching banks is not the onerous task it once was, although businesses of all sizes can understandably be reluctant to embark on what they perceive to be a potentially time-consuming and stressful process. Most banks – keen to expand their small business market share – try to make it as simple as possible to transfer your financial affairs to them and some have departments dedicated to overseeing this process for you.

“Switching is happening but still quite slowly,” says Lloyds TSB‘s Harding. “I‘m consistently surprised that more people don‘t switch. We, as well as a number of other banks, have worked hard to make it much easier for customers to switch banks by taking care of all of their standing orders and their direct debits, together with a compensation package in the event that we miss any of our promised timescales.”

In the context of a burgeoning market, don‘t forget to exercise your right to take your bank to task if you are in any way dissatisfied with the level of service they have provided. The BBA‘s Brian Capon says that you should always raise your concerns with your bank to see if you can get a better deal before making the decision on whether to take your custom elsewhere. “It‘s always worth taking the issue to your existing bank: if you‘re not happy with their charges or any other aspect of the service, tell them,” he says. “It may be possible to get a better banking deal without having to switch your account.”

Figures from the BBA suggest that over the last 12 months, around 547,000 small businesses have established new banking relationships. So it‘s little wonder the banks are continuing to refine their small business banking services in order to stake a claim to a share of this sizeable market. It‘s those companies that are prepared to put up with shoddy levels of service because they think there‘s no other alternative that will really miss out.