How to Choose a Business Bank
| Finding a bank to provide financial services for your
company is more complicated than
choosing a personal banker. While convenience and a wide range of services are important for both personal and corporate accounts, business banking requires a hard look toward future needs and a willingness on the part of the bank to grow along with a business client. Your accountant can provide excellent counseling on which banks will be best able to serve you. Does your company require more than just a commercial checking account? Be sure the bank you choose offers loan options, payroll services, cash management services and direct-deposit capability. A bank's ability to handle your firm's payroll, for instance, can cut down on in-house staff needed for that responsibility. And most institutions now provide direct-deposit payroll services, which benefit employer, employees and the bank. Additionally, when a business has employee withholding taxes of $50,000 or more a year, federal law requires automatic transfer from the bank to the Internal Revenue Service, but some smaller banks can't do that. Call various banks and determine which offer the most convenient services for the lowest cost. Often, a bank is chosen because of a business's proximity to a branch. If daily deposits are required, or other services are needed each day, such as change for a retail establishment, a bank nearby may be a good idea. But you don't have to deal with only one bank. Some businesses use different banks to separate accounts. Consider direct and indirect costs. Direct costs include fees the bank charges. Indirect costs -- keeping a compensating bank balance, for instance -- are more insidious and must be taken into account. Select a bank that can provide for your company as it grows and expands. Do you anticipate your needs exceeding the bank's lending limits? If your business expands nationwide, will the bank be able to continue providing the same kinds of services? How about international sales? If you are doing work overseas, you'll need a bank that provides international service, and only a certain number of banks are good at handling international transactions. Don't assume that you have to deal with a large bank to get international services. Some smaller banks near borders with Canada and Mexico also have experience handling international transactions. Changing banks in midstream can be inconvenient and expensive, so try to assess your needs accurately in this area. It's important to be comfortable with the person or people who will be handling your company's money. Schedule time to sit down with your banker and talk about your business and your hopes for its future. Decide together how the bank can best serve you. Your bankers must understand the working of your business, its needs and its financial resources, so they themselves can sell your loan applications to their supervisors. To make the banker's job easier, you must work with him or her, completing paperwork and making accessible any pertinent information about your firm. This process will go a lot more smoothly if you like and respect the person with whom you will be working. In the past, decisions by large banks were made at the headquarters. But these days, decisions on all but the largest or special industry loans are usually made locally. However, it is important to recognize whether your individual banker and those responsible for your loans share the same philosophy of the bank they work for. If your account officer leaves, and the philosophy is different, you could find yourself in a jam the next time you need a loan. |