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Sig Biz Advisors A guide to bank charges and how to reduce them Shop around Increased competition among banks means they are not as arbitrary or as heavy-handed as they used to be. There are a lot of banks eager for business custom so it really is worth shopping around. New types of bank There are many new entrants to the market offering lower charges and interest rates provided you fall into quite restricted categories (such as no borrowings or cash handling). If you fit their profile, you could do better than on the High Street. Compare charges Transaction charges for cheques, deposits, ATM withdrawals, standing orders and direct debits may vary significantly so it’s worth doing some research. Also find out about respective ancillary charges for services such as additional statements, night-safe facilities. Enquire about borrowing-related charges on approved and unauthorised overdrafts? How much do they charge for letters to inform you that you have slipped into an overdraft? Free Banking Ask about free banking options. If they don’t offer it, ask for it for a limited period. You will have to balance the free banking against the possibly higher charges when the honeymoon period ends. Haggle ! Do not be inhibited! Many senior business men & women mistakenly believe that it is not possible to negotiate. They accept that all tariffs are set by head office. This is not true! Electronic and Internet banking Find out if they offer electronic or internet banking. Are charges less for Internet transactions? Telephone banking can be very useful but check to see whether the bank charges for this service. What other services can they offer? Manage your account better Even if you don’t wish to switch banks, there are usually ways to save money on bank charges. Banks produce reports that indicate how much it costs them to run your account. Review your charges every year and ask your bank manager to suggest how you could reduce your charges based on this report.
Using credit where possible, thus avoid charges on several payments rather than a single monthly debit. You can also save yourself some cash by putting several cheques received onto one paying-in slip. Automate as much as possible - standing orders, direct debit and BACs payments are usually cheaper than cheques. Avoid unauthorised overdrafts You can fall into this even without appearing to go overdrawn, for instance, if you make payments before cheques paid in have had a chance to clear, this usually takes three working days. Consider alternative types of account. Some banks offer telephone banking which is much cheaper.
When you do agree rates, get them in writing. Never mind the official forms, get any special terms you negotiate confirmed in a separate letter of understanding. It saves argument over any arbitrary charges later on.
Ultimately, however, the most important element of a business account is the bank manager himself. Find one you can get on with and haggle for the rest.
Where an arbitrary or excessive charge is made, complain. Your case will be stronger if you can refer to a letter which explicitly sets out the charges. It helps if your are in a position to switch banks easily. Remember they need you as much as you need them. Finally If you have an overdraft facility of over £50,000 which has been in place for a least three years, then it will be well worth having a ‘no-win-no-fee’ bank audit undertaken for you. Sig Biz Advisors can arrange for this. |