Is your bank doing all it can for you? In a climate of change, consolidation, and loss in the banking industry, it is time to evaluate how your bank stacks up against the competition.
Relationship and customer service
You should have a solid relationship with your bank. Think of your banker as a business partner. Bank employees need to provide you with solutions to your problems, not with more problems. You should feel comfortable with the staff and be able to ask questions. When you have a good relationship with your bank, you are better able to obtain a loan, line of credit, or even eliminate onerous fees. Ask for testimonials, ask other business about the level of customer services at their banks.
As a small business owner, you may find you get a better banking experience at a bank which has many other clients just like you, rather than a bank that is focused on a larger commercial enterprise. How likely is your bank to understand the financial needs of your business or provide you with a loan? Does your bank offer government backed loans? For example, is your bank a Small Business Administration lender? Some bank branches even cater to specific business businesses” real estate development, the wine industry, etc. They may even connect you to other businesses that may be of service to you. Low rate is great, but not at the expense of expertise – your bank could be an invaluable source of services and advice.
Comparing fees between banks is not a task for the faint-hearted, but collecting as much information as you can on the services offered by each bank and the fees charged for those services. Consider the total of the fees you anticipate. Make sure you understand the minimum balance required to avoid fees. Ask other business owners about the fees at their banks. Do the fees seem reasonable, or do they seem excessive for the service provided? Be aware that banks may also have several options with some types of commercial checking accounts carrying more fees than others, or some savings vehicles offering more interest than others. When discussing options with bank staff, ask as many questions as you can, and be sure to relate your business objectives as clearly as you can. Remember, some fees may be open to negotiation, so ask!
Maybe you enjoy taking a break and visiting your local branch to do your banking, but you should select a bank that offers the convenience of online banking. You can easily manage your cash and checking accounts, pay bills, handle credit collections, manage payroll, view statements, and apply for loan. Online banking also might result in lower, or no, fees for certain services. Be sure to examine all the services that each online banking system provides!
Some banks offer free checks and low fees. Other banks partner with businesses to offer retail discounts, or may offer travel, hotel, and dining discounts and business travel services. If you do a lot of purchasing or traveling, incentives like those could be pretty valuable. Banks might also offer savings on loan interest rates if you are using the loan to “go green.” You may be able to get a deal on your personal accounts as a benefit. Compare the extras that your local banks offer.
Maybe the best bank for you is not a bank at all. Maybe your best financial partner is a Credit Union. While some credit unions are open only to certain businesses or industries, there are also credit unions that are open to a geographical population and that offer commercial services. At a credit union, you are more than a customer – you are a member. Credit unions were established to serve their member and often provide higher ineptest, lower loan rates, and minimal fees. While they have not been totally unaffected by the recent woes of the financial industry, credit unions are generally very prudent stewards of your finances and put profit into their members’ pockets rather than into the pockets of investors.