Cheat sheet: Picking the right bank for your business
When starting a small business, one of the first significant decisions is deciding which bank to use. Having a bank that can provide the right services and features is crucial to getting your business off to a flying start. In this cheat sheet, we'll review some of the essential features and services that small businesses need from their bank so you can make the best decision for your needs. They say you are more likely to get divorced than switch banks, so it's an important decision to get right!
To begin your search, you must research different banking options to find the best fit for your business. Many small businesses may think that all banks are the same, and on the surface, that may be true. However, there are many different aspects for you to consider. Besides their products, each bank has different fees, support hours, and lending services. Some banks have a more business-focused strategy and invest in features and services better suited to small businesses. Then there are additional products that some banks provide, including merchant terminals, dedicated business branches, foreign exchange, and industry-specific services.
"When opening a business bank account, small business owners should set up separate bank accounts for business and personal use."
When opening a business bank account, small business owners should set up separate bank accounts for business and personal use. Having different accounts helps maintain clarity and accuracy in financial record-keeping. This separation of finances makes it easier to track business expenses, manage budgets, and keep track of your income for tax purposes. When you have everything in one account, it can be challenging for business owners to control their finances, monitor their cash flow, and make informed financial decisions.
Now that you know what's involved in finding a bank to use, let's run through a cheat sheet of things to consider:
Having a business bank account is essential for any small business. Business accounts allow you to separate your personal and business finances, making managing your money and keeping track of your tax easier.
Look for an account that is easy to open online, so you don't have to visit a branch, and read the fine print to ensure there are no hidden fees or charges. When opening an account, you'll typically need two forms of ID for each business owner, partner or director. The typical steps to sign up for a bank account are:
- Provide personal details, contact details and address
- Enter two forms of ID to confirm your identity
- Confirm the ABN and business details of the business you want to register
- If there are multiple business owners and directors, they will also need to conduct ID checks.
While most larger banks offer online verification, many still require you to go into the branch if you have multiple business owners to provide wet ink signatures and completed forms. Standing in a long queue at a branch can be time-consuming and tedious if you are a busy business owner.
New players such as Thriday allow for a complete end-to-end online enrolment process. With Thriday, you can sign up in under 3 minutes, and everything is processed immediately. By the end of the registration process, you'll have a BSB and Account Number, along with a Visa Debit card* on its way in the post.
Paying attention to the details is essential when looking for a bank account. Check to ensure the bank account is FCS-protected, and this means that the Australian government protects your funds up to $250,000 per account holder. Thriday does provide FCS-protected accounts via a partnership with Regional Australia Bank.
Some services such as HNRY, Prospa, Airwallex and Revolut may give the impression that they offer bank accounts, but they are not FCS-protected. This means your funds are generally held in a trust account under the stewardship of that business.
With data breaches and security being a top fear for small business owners, it's important to feel comfortable with the security standards of the bank you select. To get started, you should check the bank's website to learn more about its information security policies. The bank should have a clear policy that outlines its approach to handling your data.
The bank may have received third-party certifications for information security, such as ISO 27001, PCI-DSS or SOC 2, which can be found on its website. Thriday, for example, is ISO27001 compliant, the leading industry standard for data security, and in addition, Thriday conducts extensive penetration testing with CREST-accredited providers.
The bank should also have multiple security features for online and mobile banking, such as two-factor authentication, encryption, and monitoring systems to detect and prevent fraud. Thriday uses a two-factor authentication system that sends a notification to your app to confirm new payment recipients or change things such as your PIN or payment limits.
As a business - quickly getting paid and paying for things - is super important. Banks will typically allow customers to deposit and withdraw money from their accounts through various methods such as ATMs, mobile apps, and in-branch tellers.
Some key types of payments you'll want to ensure your bank provides are:
- Funds Transfer: This is an electronic transfer between bank accounts using a BSB and Account Number. It can be used for recurring payments, such as monthly payroll, or one-time payments, such as paying a supplier.
- BPAY: Most banks allow customers to pay their bills online using BPAY, which saves them time and money compared to paying in person. BPAY is secure, easy to use, and available on most invoices.
- Mobile payments: Many banks provide mobile payment services such as Apple Pay, Google Pay, and Samsung Pay, which allow customers to make payments using their smartphones.
Thriday supports all these payment forms and has a partnership with Australia Post Bank@Post, which allows you to deposit cash or withdraw funds from Australia Post outlets across Australia.
Merchant terminals are another thing some businesses will require. Terminals are point-of-sale (POS) devices that allow companies to accept card payments in person.
If your business needs to accept card payments, you should review which bank has the best service, pricing and business insights. Most banks charge a monthly or one-off terminal fee and a per-transaction charge.
Look for competitive prices, as it can quickly add up when taking a lot of card payments. In addition, the terminals can provide valuable data and insights into customer spending habits, so learn more about the data your terminal can provide.
Online & Mobile banking
Being able to bank on the go can make it easier to manage your business finances, regardless of your location. Look for a bank that offers online banking services, including online bill payments, account management, and online statements.
Thriday has some incredible features for those looking for a great digital offering:
- Biometric login with Fingerprint or FaceID
- Two-factor authentication using push notifications
- Payments via BSB and Account Number
- Secure BPAY payments
- Receipt upload and scanning
- Apple and Google Pay payments
To help you make the right choice, go to the App Store and check out each banking app's reviews that pique your interest.
Credit card facilities can be helpful for small businesses, particularly for purchasing inventory and managing cash flow. Look for a bank that offers a range of credit card facilities, including corporate credit cards, purchase cards, and travel cards. Check their credit rules, as some only provide credit to businesses within their first two years of operating.
Small businesses often need access to credit to fund their operations and growth. Look for a bank that offers a range of business loans, including equipment finance, working capital loans, and business lines of credit. Look at the typical terms the bank requires and double-check their lending requirements. Some banks only lend to businesses that have been established for at least two years, so see if you can find one with the systems to lend to you earlier.
Foreign exchange services
Foreign exchange services can be critical if your business deals with international suppliers or staff. Look for a bank that offers foreign exchange services, including international money transfers and foreign currency accounts.
As a small business owner, you'll often have many questions and need support from your bank. Look for a bank that offers customer support, including phone and live chat, and good opening hours so you can get in touch when needed.
A small business needs to pick the right bank because it can play a significant role in the success and growth of a new venture. Choosing the right bank can significantly impact a business's finances, including the cost of banking services, credit availability, and the security of funds. A good bank can offer various services and tools to help manage your business. We hope you found this cheat sheet valuable and that it enables you to shop around and compare different banks to find one to meet your business needs.