How to switch a business bank account

It’s normal to wonder whether your bank is fulfilling your needs, but if you stay put when you know things are wrong, you may be doing yourself and your business a disservice. Thankfully, switching to a new business bank account is relatively easy and there are plenty of positive reasons for doing so.

What are the main reasons to switch business bank accounts?

As a company owner, you may choose to switch your business bank account for a variety of reasons, including:

• Banking perks. You may find better benefits on offer elsewhere, including debit card cashback, business insurance, free invoice generation function and dynamic income tax calculator

• Fees. Some accounts attract fees, either immediately or after an introductory period. Either way, you may want to move to an account that doesn’t charge

• Customer service. If your bank rewards your loyalty with shoddy customer service it’s probably time to move on. Compare customer satisfaction survey results and reviews for different accounts to find out who’s not taking their clients for granted

• Bank account tools. Most banks have embraced the benefits of modern technology, including intuitive online banking, mobile apps and personalised accounting tools. Should these appeal, but your bank doesn’t offer them, it may be time to switch

• Big business. Some business bank accounts are designed to appeal to start-ups and small businesses. These options may not be suitable as your firm grows, especially if you’d benefit from having a dedicated account manager, higher loans and priority customer service

• International business. If your business starts to take on overseas work, you’ll benefit from an account that can cater for multiple currency transactions and payments

• Branch closure. If you work with cash and your local branch closes, you may want to switch to a bank that has a presence on a nearby high street

If any of these issues sound familiar, it might be a good idea to start comparing business bank accounts to see if you can’t find one that better suits your needs.

How do you go about switching a business bank account?

Switching business accounts may seem daunting, especially if you’ve been with the same bank for many years, but it’s actually relatively easy. This is because the Current Account Switch Service covers 99% of UK personal and business accounts across 50 banks and building societies.

You can use this service as long as both your current and new banks are signed up for the switch guarantee scheme and your business has fewer than 50 employees and an annual turnover of £6.5 million or less. If you are unsure whether your bank is signed up to the scheme, it's best to contact them for more information.

Finding the right account

If you would like to switch, you’ll need to follow these steps:

• Ensure all parties agree. If your business bank account is jointly held with a partner, both parties will need to agree to the switch

• Identify the best new account. Use a comparison site, such as Money.co.uk, to find the best new business account for your company

• Check the fees. It’s important to check how much you might have to pay in fees to spend or receive money. Consider debit and credit cards, BACS, CHAPS and even the humble cheque 

• Check the small print. Don’t focus only on the headline benefits. Look at the contract to ensure the account is suitable and that you meet the bank’s eligibility requirements, otherwise, you may face a rejected application. For example, some accounts require you to set up a minimum number of Direct Debits or deposit a certain amount of money each month

• Agree on an overdraft. If you need an overdraft, you’ll need to agree it in principle and make sure it’s large enough to cover your current overdraft before switching 

Arranging to switch

Once you’ve found a new account, there are a few things you can do to prepare for the switch:

• Check your payments. Review your standing orders and Direct Debits, cancelling any you no longer need

• Get your records. Your account history won’t be transferred when you move. You’ll need to let your bank know if you want a copy of your past transactions before your switch date 

• Set your switch date. Select a convenient switch date, which must be at least seven working days following your application. The switch can’t take place on a weekend or bank holiday

• Switch. When applying, ask your new account provider to move your old account using the Current Account Switching Service 

Note: When applying, you’ll need to ensure your new bank is willing to accept you with an overdraft. It must also have agreed to the Current Account Switch Agreement and the Current Account Closure Instruction.

How long does it take to switch a business bank account?

Although you’ll need to set a switch date at least seven working days after your application, that’s not the only time-related thing to bear in mind. Banks differ in how long they take to consider applications. Some offer almost instant decisions, while others can take up to seven working days. 

What happens when you switch business accounts?

On your switch date, your balance and any automatic payments, including Direct Debits and standing orders, will automatically transfer to your new account. Your old account will close on the same day.

The Current Account Switch Guarantee covers the whole process, offering an invaluable level of reassurance and protection. If there’s a problem with the switch date, your new bank will contact you beforehand. Should anything go wrong with the switch itself, you’ll be covered for any losses incurred as a result, including any lost interest.

Despite the guarantee, it’s sensible to pick a switch date that doesn’t fall on or next to a day when you’re due to make a payment.

Do you have to close your old business account?

While most advice focuses on switching all your business to a new account, it is possible to make a partial switch. This might be preferable if a full switch isn’t possible, for example, if your new bank won’t support your overdraft requirement. You may also choose to keep your old account for a particular feature it offers, for instance, accepting  payments in a particular foreign currency that your new account doesn’t support.

Do you need a business bank account?

Becoming discontent with your business bank account for whatever reason should spur you into action. But it’s worth considering whether you need a business account or whether a personal account would suffice.

While you must have a business account if you run a limited company, sole traders can use personal bank accounts, which, while not ideal, could be an option if your accounts are relatively simple.