What to do if your business bank account is closed down
4 min read
18 March 2014
Frozen out of banking? Don’t be left out in the cold, writes Richard Wagner of Advanced Payment Solutions. Here are his tips.
You have a great idea for a business, you have the staff, an office, the IT and a business plan. But the one thing you don’t have is a bank account. With up to half of all businesses turned down for bank accounts and many more being told they will be closed at short notice, what can business owners do if they find themselves in this situation?
Don’t waste your time arguing
Banks have a right to decide that they don’t want someone as a customer, as long as they give at least 30 days’ notice and their reasons are not unlawfully discriminatory.
You can always go to the banking ombudsman, but it will take time to settle any disputes. Time you could spend looking elsewhere.
Think about what your business needs
Write a list of the things that are most important to your business right now, and focus on finding something that will deliver what you need.
Did your account – or the one you applied for – save you time and paperwork? Could you closely track and account for employee expenses? What about hassle-free foreign currency transactions?
If not, you may actually be better off with a different solution. In the early days of a business, you need your cash flow to be simple and manageable, enabling you to focus on what you do best. Would prepaid cards, which have a set amount of funds, work better for you?
Don’t assume that your banking will now be more expensive
Free doesn’t always mean free, it often means that the charges are hidden. Free business banking is often paid for with high fees and penalty charges, and however good your intentions, statistically, most businesses do incur them.
Make sure you understand all of the charges that might be connected with your account, and that you are getting the best value you can. Paying for a business banking service usually saves you money in the long run.
Look at your re-financing options
The closure of your bank account probably means that you also have to repay any loans from the bank, which may mean you need to re-finance the company.
Review your business plan so that it’s ready for any investors or loan companies. They will want to see accurate records of income, expenditure and projections for the next six months, at least, so that they can be sure you can repay any money borrowed.
Look into your banking alternatives immediately
Don’t take chances; set up something as quickly as possible to prevent a headache later. Banking has moved on in recent years and the traditional high street bank accounts are not the only or even the best option for most businesses.
Ask yourself what you really need? Do you need to be able to bank and cash cheques or, like most businesses, are you taking payment online? If a new bank is going to take ten days to allow you in as a customer, what are you going to do in the meantime?
Richard Wagner is CEO of Advanced Payment Solutions.