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Is It Time to Change Business Banks?

November 24th, 2011 :: Karen Axelton

By Karen Axelton

Recently the Occupy Wall Street movement’s Bank Transfer Day made headlines nationwide. The event encouraged consumers to move their bank accounts from big multinational banks to credit unions in protest over rising bank fees. Inspired by this movement, is it time for your small business to consider changing its banking relationship?

Moving from a big bank to a smaller one or vice versa isn’t necessarily the right move for your business, but Bank Transfer Day is a good reminder that you should regularly evaluate every vendor you work with to make sure they’re still providing what you need. Your business bank is no different. What should you ask? Here are some factors to consider when making your evaluation.

Fees: Has your bank recently raised its fees? This alone isn’t an indicator that you should move, but you do need to consider what you’re getting in return for the fees and how easy it is to avoid fines or fees.

Convenience: If you need to physically visit the bank often to deposit checks or talk to a banker, how easy is it to do so? Is your bank located nearby? What kind of hours does it have?

Technology: Does your bank offer technology that can save you time and money, such as the ability to invoice clients electronically or make remote deposits? Do they help you learn to use the technology and is it affordable for your business?

Services: As your business grows, does the services your bank offers still keep pace with your needs? Maybe you’ve expanded into international trade and need more help in that area than your current bank can provide.

Personal Touch: Less tangible than many other considerations, the personal touch can be the biggest factor in a small business’s decision of where to bank. Do you have a banker you can talk to when you need help? Is your banker involved in your local community and does he or she take the time to get to know your business and your goals and dreams? Can your banker help with small business loans, lines of credit or other financial tools to expand your business?

The size of a bank or credit union shouldn’t be the deciding factor in your choice. While many small business owners like the community feel of local banks, bigger banks are making extra efforts to reach out to small business today. There are many choices in where to take your business, so if you feel that your current bank or credit union isn’t serving your interests, maybe it’s time to change.

Image Courtesy: Karen Axelton

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Tags: small business accounting, small business banking
Posted in Accounting and Taxes, Capital Access, Compliance, Raising Capital, Small Business, small business | 1 Comment »

How Direct Deposit Can Save Your Business Time, Hassles and Money

June 6th, 2011 :: Karen Axelton

By Rieva Lesonsky

Are you looking for ways to simplify your life, streamline your small business and keep your employees happy at the same time? Then one option you should consider is using direct deposit for payroll.

A recent survey by NACHA — The Electronic Payments Association found some surprising news: 48 percent of small business owners do not use direct deposit for payroll. That can be a big mistake, because direct deposit is an easy way for your small business to save thousands of dollars, increase your employees’ satisfaction and reduce your business’s impact on the environment each year.

The top 10 industries that NACHA found are least likely to use direct deposit includes many typically small businesses: Repair and maintenance services (plumbing, pest control, etc.); food services (deli, fast food, restaurants); personal care services (hair, nail, spa); retail (all types); construction; wholesale trade; arts / entertainment; real estate sales / rental / leasing; agriculture / fishing / mining; transportation.

The survey additionally reveals:

Even as small businesses get bigger, many of them still don’t use direct deposit. Eighteen percent of small businesses with revenue between $10 million and $20 million still do not use direct deposit.
Businesses where less than 75 percent of workers are salaried are less likely to use direct deposit.
Small businesses that don’t use direct deposit waste a lot of time. One-fifth of small business owners who don’t use direct deposit in their business visit their financial institution 15 or more times per month.

Direct deposit isn’t just for your employees—you can also use it to pay vendors. According to the NACHA survey, small businesses pay an average of 96 vendors by check each month. Switching these to direct payment could save the average business thousands of dollars annually when the cost of cutting and processing checks as well as employee work time is taken into account.

Here’s how the savings from direct deposit breaks down:

It costs a business up to $2 to cut and process a hard-copy check vs. $.35 or less for direct deposit.
A business with 25 employees would save at least $2,000 a year. A business with 100 employees would save at least $7,000.

Of course, there’s also the savings in terms of printer ink, paper and envelopes that you won’t be mailing. NACHA and PayItGreen have created a simple calculator that helps you determine your carbon footprint savings of switching to direct deposit:

Many employees expect direct deposit these days—and offering them this convenience is one way your small business can compete with bigger employers.

My company uses direct deposit; we wouldn’t have it any other way. Switching over is simple—just talk to your banker or financial institution.

Image by Flickr user leafbug (Creative Commons)

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Tags: small business accounting, small business banking
Posted in Accounting and Taxes, Compliance, Small Business | No Comments »

Shopping for a Bank, Part III: The Huge National Bank

March 22nd, 2010 :: Monika Jansen

In this third installment of my three part series on bank shopping, I share with you what I learned about small business banking at a national bank. The difference: money. I’m not being facetious. You’ll see what I mean in a minute.

In case you—gasp!—missed it, I’ve already written about Access National Bank, a small community bank with five locations in northern Virginia, and BB&T Bank, a regional bank in the Mid-Atlantic and Southeast. My goal with this bank shopping exercise was to figure out which type of bank would be most convenient, easiest, and most fun to do business with. I’ve got my answer.

From Steve Rhodes on Flickr

Since my husband and I use Bank of America (BofA) for our personal savings and checking accounts, I thought I’d look into using them for small business banking. Their reach stretches around the world, and, thanks to the recession, they are now the proud owners of Merrill Lynch. Anyway, instead of visiting a BofA branch to talk to a manager, I decided to research them online. As soon as I started scoping out small business banking information, I was asked if I wanted to chat live with a BofA rep. Sure, why not, I thought. I was immediately asked by “Jewell” if I’d like to open an account. And so the hard sell began. (The following are just excerpts from our chat.)

Monika: I’m actually bank shopping, so I’m not ready to open an account yet. What sets BofA apart from the competition? In other words, why should my small business bank with you guys?

Jewell: Our customers have the piece [yes, that is how she spelled it] of mind knowing that BofA is a strong, secure bank during these difficult financial times. Also, BofA is one of the world’s largest financial institutions, serving individual consumers, small businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services.

Monika: Why should a small business bank with you? What kind of service can I expect to receive?

Jewell: We provide unmatched convenience in the United States….Also we are among the world’s leading wealth management companies and a global leader in corporate and investment banking….We also serve clients in more than 150 countries…..We offers [again, yes, that’s how she spelled it] industry-leading support to more than 10 million small business owners through a fleet of innovative, easy-to-use products and services.

And so the conversation went. I asked a question, and I got long, canned responses from Jewell. Their “innovative” products and services, dubbed the Online Business Suite, all come with a price tag. Seriously? I need to pay you to make my life more convenient? They do have an online community for small businesses, but honestly, if I need an opinion about something I just turn to my own network. The kicker: if I wanted personalized service, I could request to have a client manager assigned to me.

So back to my point at the beginning of this post: the difference with BofA comes down to money. They have the money to track me looking around their site, and they have the money to pay someone to chat with me live online. They have lots of extra money thanks to the fees they charge their customers. They have money because they’re so big. But so what? I would obviously be a number to them.

Oh, and I’ve only kinda made a decision about which bank to use. I loved both Access and BB&T, so it looks like it’ll go to the coin toss. May the best man win.

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Tags: national bank, small business, small business banking
Posted in small business | No Comments »

Shopping for a Bank, Part II: The Regional Bank

March 12th, 2010 :: Monika Jansen

As I recounted in Shopping for a Bank, Part I, I hate math, numbers, accounting, the whole shebang. Since the March Grow Smart Business theme is small business finance, I was not sure what I would write about, as my posts are normally about marketing. Then a light bulb went on: Since I am currently bank-shopping, I would use my experience as blog post fodder. I already wrote about the upside of doing business with a small community bank; specifically, Access National Bank, which is headquartered in Reston, VA and has five branches. I now turn my sights on a regional bank; next up will be a huge national bank. My goal is to figure out which type of bank would be most convenient, easiest, and most fun to do business with.

Without further ado: the regional bank.

I met Mike Moore, Assistant Vice President at BB&T, through networking. He is a really nice guy, and if you read enough of my blog posts, you know that the simple act of being nice earns huge points in my book. We sat down together recently, and he gave me some background on the bank. It was founded in 1872 in Wilson, NC and is now headquartered in Winston-Salem, NC. Their territory stretches from Maryland down to Florida and over to Texas (after first leap-frogging over Mississippi and Louisiana). They have 1800 branches, and their bank is in the top ten in the US in terms of size. They also own the sixth largest insurance brokerage firm in the US, and they have a merchant services company under their umbrella as well.

Just as I asked Access National to run down a list of what makes them unique, I asked Mike to do the same. Here’s what he said:

Over the past 18 months, BB&T’s focus has shifted to servicing small to mid-sized businesses rather than just personal accounts. As a result, Mike and his colleagues are not strictly lenders anymore but rather small business advisors who build a collaborative relationship with their clients.
Not only does Mike put together banking and financing plans for his clients, but he also meets with and speaks to his clients on a regular basis to find out if their needs have changed. He is also easily reachable via email or his direct office line.
“We’re as big as you want us to be, and we’re as small as you want us to be.” BB&T offers all of the products and services the huge banks do, but only if you need them. In other words, credit cards, mortgage refinancing, special car loan rates, etc. are not pushed on BB&T clients.
Though BB&T is fairly large, decision-making is done locally, allowing Mike and his colleagues to make quick decisions on behalf of the bank for their clients. The fact that the employees are empowered to make decisions that put the bank at risk (lending is a risky endeavor, after all) speaks volumes about the leadership at the bank. It is extremely important for me to work with people and institutions who view trust as a two-way street.
Because BB&T has its own insurance brokerage firm and merchant services company, they can offer lower rates on certain services.
BB&T is still lending money to small businesses, even start-ups. Mike said the fact that the media constantly talks about restricted access to capital is wrong, and he gave me examples of loans he has recently made to clients. I wonder if it’s only the huge, TARP-dependent banks that are not lending money?

When compared to Access National, BB&T offers the same highly personalized service. I would not be a number with them, something I really appreciate. Naturally, they offer more products and services, but one product in particular is a big deal for me: BB&T offers a credit card, while Access only offers a debit card. However, Access is across the street from me, while I’d have to drive to BB&T. Again, not a huge difference, but an important one.

Next up: the huge national bank (and yes, they received TARP money!).

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Tags: banking, Financing, small business banking, small business loans
Posted in Capital Access, small business | 8 Comments »