Switching banks

Have you created a list of all bank accounts in your company?

Include what the account is used for; account details such as branch, BSB, account number, account name; and any special arrangements with each account, such as set-off arrangements. All social accounts, old companies, branch accounts, petty cash accounts and special-purpose accounts should be included.

This information can be obtained from your bank statements or by asking your bank(s). You may be surprised at the number of accounts you have.

Have you obtained a letter of facilities?

Request a letter of facilities from the banks you deal with. The aim is to build a complete picture of all your banking arrangements. In your letter, ask your banks to ensure all facilities are covered, including:

• Credit or purchasing cards
• Merchant facilities
• Trade facilities
• Lease facilities
• Any information on loans that the bank provides
• Letter of credit
• Internet banking
• BPay
• Cheque cashing

Have you selected your top three preferred banks on your business priorities?

How you select these can be based on any criteria, such as the bank you have the most transactions with, the quality of their service, friendly staff, convenience, or pricing sensitivity.

Knowing the existing or likely account manager (and having a favourable impression) is often a good reason to include a bank in your list.

Have you met with your current bank?

Once you have collected the required information, you are ready to meet your bank. The aim here is to give your existing bank a chance to improve the price and/or service or any other criteria you have noted.

When the bank has all your information, ask your banker what will be the best package and fees available to you. Usually, a bank will give you its best rates when you agree to do all transactional banking arrangements through them.

Have you reviewed your current bank’s offer?

The areas you should be reviewing are loan fees, interest margins, merchant facilities and cash handling if you are in a retail business.

If your bank offers you improved pricing and service levels, you may wish to stay with them and stop the review process. At that stage we recommend you ask your bank to detail a letter of agreement including the renegotiated fees, charges and service levels offered. If possible, negotiate for these revised terms to apply for one to three years. If your bank does not offer a better deal in pricing, you should find out why and what is missing from the picture.

Have you met with alternative banks on your list?

If you are not happy with your current bank’s offer, make an appointment with the next bank on your preferred bank list. If you disclose your current pricing, the second bank may only offer you a deal that is slightly better than that of your current bank.

Have you considered the following factors?

• Will your business incur additional costs as a result of switching ?
  For example, costs in notifying customers and suppliers, changing deposit and cheque books.
• Does the new bank’s service match your priorities?
  You may be able to find out by talking to some of their customers. You may have customers or suppliers who have an account with the new bank.
• Give preference to the bank that allows you to meet with bank staff other than your account manager
  This should include the bank manager and perhaps even the regional manager. Staff movements occur on a regular basis within banks so it’s preferable that more than one staff member of the chosen bank has an understanding of your business and the banking relationship.